Community Lending Field Guide

Smart lending products that meet real community needs

Balancing access, risk and sustainability to support long-term homeownership success

Increasing access to homeownership in your community isn’t just about approving more loans. It’s about helping borrowers achieve sustainable, wealth-building homeownership. That means avoiding shortcuts that can lead to future financial strain, foreclosure or lost equity.

Why prudence matters: Avoiding risky expansions

It can be tempting to loosen credit standards or push borrowers into loans that could be beyond their means in order to boost volume. But this often backfires by increasing the likelihood that borrowers won’t be able to weather unexpected life events, like job losses or medical emergencies, ultimately losing their homes and wealth.

So, as you build your community lending plan, focus on products and guidelines that balance expanded access with responsible risk management.

Know your market: What data can tell you

To tailor your approach, start by analyzing local lending patterns and barriers:

  • Review HMDA data for denial reasons, credit issues and geographic trends. For example, credit challenges may dominate denials in some neighborhoods, while property conditions show up in others
  • Use tools like the Fannie Mae Data Dynamics platform and Freddie Mac Single Family Loan-Level Dataset to get insights into loan performance and risk factors
  • Talk directly to local nonprofits and housing counselors. They often hear firsthand the obstacles potential buyers face, from credit gaps to down payment hurdles

Understanding these nuances will help you design solutions targeted to your community’s real needs. This allows you to focus on borrowers who are “Mortgage Ready,” and help those who are “Not Mortgage Ready” get there responsibly.

Tailor your product mix: 4 key solution areas

Here are 4 product and program areas that can make a real difference when thoughtfully applied:

  1. Nontraditional credit: Expanding credit evaluations beyond traditional scores to include rental, utility and other payment histories can open doors for credit-visible but underserved buyers
  2. Overcoming the down payment barrier: Low-down-payment options are essential to widen access without excessive risk. Consider:
    • Fannie Mae HomeReady® and Freddie Mac Home Possible® loans
    • Housing finance agency (HFA) programs
    • Federal housing programs like FHA, VA, and USDA rural development
    • For portfolio lenders, partner with MGIC on portfolio products: Community Pro™ for underserved borrowers and underserved communities, and WealthBuilder Pro™ 100% LTV with a 20-year term builds equity (and wealth) much more rapidly than 30-year loans
  3. Expanding guidelines for non-site-built homes: Manufactured and modular homes can provide affordable, quality alternatives in markets with limited traditional housing stock
  4. Addressing cash reserves after closing: Ensuring borrowers have some financial cushion after closing reduces default risk and supports long-term stability

Pre- and post-purchase counseling: The unsung heroes

Don’t overlook the power of homebuyer education and counseling. These services help borrowers understand what it takes to maintain homeownership and manage finances, boosting their chances of success beyond the closing table.

Final thought: Balance access and responsibility

Increasing affordable homeownership access means more than just opening the door – it means helping borrowers walk through it and thrive long-term. By using data, engaging with community partners and carefully selecting products within your risk tolerance, you can create a community lending plan that is both impactful and sustainable. 

HomeReady® is a registered trademark of Fannie Mae. Home Possible® is a registered trademark of Freddie Mac. Community Pro™ and WealthBuilder Pro™ and trademarks of MGIC.

Need a partner to help refine your approach?

Our community lending specialists are here to collaborate with you, as an exclusive benefit of working with MGIC, and one more way we are leading the industry. Reach out to your MGIC account representative to get connected.

Contact us

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