Purchasing a home is the biggest, most challenging step into the financial mainstream for many consumers. Carolina Foothills Federal Credit Union’s Financial Inclusion Mortgage for First Time Homebuyers makes the step much easier for low-income borrowers and those who serve the community.

The mortgage, which is geared toward low-income and minority borrowers, and members who serve the community—law enforcement officers, firefighters, educators, healthcare workers, and veterans—has a 30-year term, 97% loan-to-value maximum, low closing costs, and no private mortgage insurance requirement. 

To make the mortgage more accessible, Carolina Foothills relaxed underwriting standards to accept nontraditional sources of credit, such as 12 months of satisfactory housing history, two to 12 months of utility payments, paid insurance premiums, or other proof of timely payments.

The credit union partners with local nonprofits to help members find down payment assistance. 

Carolina Foothills signed on to Federal Home Loan Bank’s Home Ownership Set-Aside Program, which assists with closing costs, down payment and financial counseling. It also joined the City of Spartanburg home partnership grant initiative, through which it provides as much as $7,500 in purchase assistance.

This initiative is a great next step for participants in other community partnership programs Carolina Foothills is involved with, including programs with the Greenville County Community Relations Division and the Spartanburg Housing Authority, says Terri Hendrix, vice president of engagement at the $162 million asset credit union.

Financial education is a key element of the program, Hendrix says. Prospective borrowers must complete six financial coaching sessions prior to obtaining the mortgage. 

“We’ve put together a full curriculum for this program,” she says. “It includes hours of sitting down with one of our financial counselors and also doing some homework. We take them through whole process of what it takes to be a homeowner.”

Carolina Foothills currently has 23 mortgages in the pipeline through the program, mostly through referrals from community partners. “We don’t do any advertising,” says Hendrix. “It’s mostly word of mouth from our partners.”

The average loan amount is $160,593, with one-third of members receiving down payment assistance grants through collaborative organizations at an average amount of $5,819.

Hendrix says Carolina Foothills’ status as a Community Development Financial Institution (CDFI) inspires its participation in such programs.

“As a CDFI, we are always looking for more options to serve our members’ needs,” she says. “Our affiliation with Federal Home Loan Bank provides access to programs such as this.”

Carolina Foothills received a 2021 Louise Herring Philosophy in Action Award for its Financial Inclusion Mortgage.

This article is part of Lending 2022, CUNA News’ special focus on lending innovations, sponsored by Cornerstone Advisors. Follow the conversation on Twitter via #Lending2022.