Defining or Refining the Product

Product 3: The Financing

In a tight credit market, many prospective homebuyers have trouble getting first mortgage financing. The main things you can do as an affordable housing developer include:

  • Make sure you are marketing to the stratum of the market that meets today’s underwriting standards.
  • Be prepared with homeownership advisors to assist buyers in accessing credit.
  • Educate mortgage loan officers on your properties, subsidies and any special resale or deed restrictions.
  • Identify lenders in your region that have already made loans on properties with subsidies and restrictions like yours so you can refer your prospective buyers to them.
  • Bring together other affordable homeownership developers, listing agents and mortgage officers regionally (by conference call, webinar or in person) so they can share ideas and successes and avoid duplicating efforts.

In a few places, nonprofits or state housing finance agencies are trying to create alternative lending pools so they can make their own first mortgages with more flexible underwriting standards. Some nonprofits are able to partner with community banks that are willing to make portfolio loans with flexible underwriting standards. Click here for a video case study of Homeport’s partnership with Huntington Bank on a portfolio mortgage product for affordable home buyers.

In the next chapter, we’ll talk through the strategies in pricing a home.