Preserving Homeownership Through Flexible Repair Financing

Local Initiatives Support Corporation (LISC) local offices, operating in more than 38 cities and rural areas, connect underinvested communities with the capital, strategy, and expertise to repair and preserve their homes, and address unmet needs in local housing finance systems.

In Detroit and Memphis, for example, programs offer loans with loan-to-value ratios of up to 150 percent and consider alternative credit histories for borrowers without traditional credit scores. These features are particularly important in markets where lower-cost homes are common, and homeowners may have limited equity or difficulty meeting conventional credit requirements. By providing access to financing beyond what a home’s existing value or a borrower’s formal credit history might otherwise allow, these programs help ensure that traditional underwriting criteria do not perpetuate the same barriers that prevent low- and moderate-income households from accessing capital in the conventional market.

In several cities, LISC has also launched programs that integrate home repair resources with heirs’ property and tangled title assistance. This approach recognizes that a lack of formal ownership is a major barrier preventing families from accessing repair assistance. By pairing repair financing with legal assistance and education to help families establish clear titles, LISC and its local partners are addressing a critical barrier to housing preservation, particularly in Black communities, where tangled titles can impede the transfer and preservation of family wealth. 

At the same time, limited local financing infrastructure and institutional capacity can constrain the delivery of these innovative products. For example, a recent LISC pilot of a hybrid financing model combining grants with low- or zero-interest repair loans for lower-income homeowners required specialized underwriting expertise, servicing capacity, and operational flexibility that local organizations did not have the capacity to support. Without investments in the organizational capacity and underlying infrastructure, even promising financing models can be difficult to sustain and replicate.

This case study is adapted from the report Small Loans, Big Barriers: How Small-Dollar Mortgages Impact the Racial Homeownership Gap in the United States and informed by discussions with LISC  leadership in December 2024.