Housing is one of the most significant expenses for any family, but particularly for those living in developing countries. People in poorer countries face high land prices, complicated or completely absent land titling processes, costly building materials, and low incomes or savings. To manage this situation, many turn to a process called incremental building whereby people build and expand their home over time as funding becomes available.
Some financial institutions offer housing finance loans to low-income people to help address this demand. Depending on the institution and product, loans may cover the renovation or expansion of an existing home, construction of a new home, or basic infrastructure improvements, such as electricity or sanitation. Mortgages to purchase land or a home are less common, but exist in some markets. As with other microloans, housing finance loans are typically not secured by collateral, and are largely based on either a group guarantee or other social capital.