How Low-Income Renters Buy Homes. Housing Assistance Supply
Although most low-income households seem incapable of meeting conventional mortgage lender requirements, some do succeed in purchasing homes. This note describes how 250 low-income renters in the Housing Assistance Supply Experiment (HASE) became homeowners despite limited income or assets or a poor credit history. Their purchases were made in two midwestern housing markets, St. Joseph County, Indiana, and Brown County, Wisconsin.
The households received no assistance from HASE other than allowance payments; they became homeowners through their resourceful use of financing alternatives. Most of the buyers obtained loans that imposed less stringent credit conditions than conventional mortgages, such as government-insured mortgages, consumer loans, and land contracts. Government-insured mortgages clearly benefited the buyer because of the small down payment required and because of the Federal Housing Administration's favorable treatment of allowance income. Consumer loans used to purchase mobile homes or low-valued houses were less attractive to the buyer because of their relatively high interest rates and short loan terms. The costs and benefits of land contracts are more difficult to decipher, since individual transactions differ considerably.
This report is part of the collection of scanned historical documents available to the public.