Working part-time and freelance, my chaotic income gives my tax preparer serious headaches. So what made me think I could buy a house? While I don’t plan on living there forever, for at least the next three years my home is my castle. I have a roommate to make the numbers happen, and thanks to a little outside help, I’ve managed to sneak my way into homeownership.

I had help from the Community Reinvestment Act (CRA). The CRA requires that depository institutions meet the credit needs of the community in which they operate. In English, this means that financial institutions need to help out their neighbors, whether they are Rockefellers or Blue-Collar Bobs.

One way financial institutions do this is by offering home loans. Only a small percentage of these were the risky subprime loans that self-destructed a while ago. The CRA was created in 1977, not as a way for companies to profit off of loans with fewer restrictions, but to help middle and lower income people afford their own homes. In fact, CRA loans were much less likely to go into foreclosure than loans not covered by the CRA.

In my case, I had great credit, but proving part-time and freelance income to a financial institution is like going to a job interview with half of a resume. For help in verifying my income worthiness, I headed to HomeFree-USA, a nonprofit organization that assists people in achieving homeownership. There I was educated about what it takes to be a homeowner, and they helped verify my cash as well as the future income I’d have from roommates. My financial institution trusted HomeFree-USA, even if they weren’t ecstatic about me, and now I’ve got a mortgage I can live with and my financial institution has fulfilled its CRA duties. Everybody wins.

We are the Baskin-Robbins generation. We come in all sorts of flavors, and there are plenty of lending programs (CRA or otherwise) to fit you:

Nontraditional Loans: Some financial institutions offer loans for certain groups that traditionally have a difficult time securing loans, such as the homeless and those living in urban areas.

Specialized Professions: Financial institutions may offer programs for specialized professions like teachers, police officers, medical workers and firefighters.

Rural Communities: The USDA uses its Rural Development Housing & Community Facilities Programs (HCFP) to help individuals and families become homeowners with several programs:

• The mutual self-help housing program enables low-income borrowers to afford homes by participating in the construction of the home they will eventually live in. Those who apply for this service must complete 65% of the work on the home, supplying what is known as “sweat equity.” Individuals who complete this work are allowed to apply for a Direct Loan.
• The direct loan program gives affordable home loans to families, most of which have incomes 80% below the median level in their community.
• The loan guarantee program assures lenders that they will receive payment, as the HCFP will pay the lender if the borrower defaults. This program allows the borrower to avoid having to make a down payment--a major hurdle for those with a low income.

Now, go harness the power of these lending programs for your own benefit.

Sources:

homefreeusa.org; federalreserve.gov; fanniemae.com; usda.gov; wsj.com; frbsf.org; census.gov