Developing Housing Microfinance Products in Central America

Can microfinance institutions provide good housing finance products?
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ACCION assists several of its affiliates and partners to develop housing microfinance products. This paper reports on the pilots in the following ACCION affiliates in Central America:

  • FAMA in Nicaragua;
  • Integral in El Salvador.

The key lessons emerging from these pilots on housing microfinance are:

  • Housing microfinance is a more appropriate than traditional mortgage lending for serving the housing finance needs of micro entrepreneurs;
  • Housing microfinance program can be integrated into an MFI's existing micro enterprise finance operations;
  • MFI's existing loan officers can be trained to offer housing loans without negatively affecting their productivity;
  • Construction assistance component of a MFI's housing loan product should be customized to the unique situation of each borrower.

The paper concludes that well designed housing microfinance portfolios can achieve a scale comparable to existing micro enterprise finance portfolios.

About this Publication

By Shumann, R.