Paper
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.
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