We act as the lending institution for a Habitat family and sell the house to them with a no profit, no-interest first mortgage. To ensure that the family’s monthly payments are affordable, we set the amount of this mortgage and the term of the loan so that the principal, taxes and insurance do not exceed 25% of the family’s monthly income.
This first mortgage represents only a fraction of the value of the house. We cover the remaining appraised value of the home with a “silent second” mortgage. This mortgage is forgiven when the family pays makes the final payment on the first mortgage. We also implement several agreements at closing to ensure that the house remains affordable for the long term.