Bad credit? No savings? Unconventional (possibly risky) ways to buy a home

Nery Peña, 27, a first-year English teacher, bought a two-bedroom apartment in Washington, D.C., overlooking the Washington Monument, for $50,000 in 2021. Similar apartments nearby start at $350,000.

The building is part of the Douglass Community Land Trust, a portfolio of properties purchased by former tenants and nonprofit groups, where eligible buyers typically earn between 30 and 70 percent of the area’s median income. In DC, that could mean a family of three making about $35,000 to $81,000 a year. The land trust also includes rental apartments.

Ms. Peña, whose family rented the building before it was converted into a co-op in the 1990s, cobbled together $15,000 from her savings and a gift from her mother, and funded an additional $35,000 through a credit union.

She pays $1,420 a month, including co-op fees; nearby similar units rent for double that amount. If she decides to sell the house, the sale price will be limited to its purchase price, $50,000, plus 3% for each year she stays.

“Honestly, I never thought it would be possible,” she said. “‘Most people who live here have known me since I was 2 years old.’

Scale is one of the biggest problems with the model. In the United States, about 250,000 households live in social shares, said Tony Pickett, chief executive of Grounded Solutions Network, a national organization in that space. This includes approximately 1,200 HDFC cooperatives in New York.

“It’s tiny,” he said.

Finding lenders who will fund the loans is a challenge because mortgages are generally smaller than market rate homes. Grounded Solutions aims to reach 1 million households over the next 10 years, pushing for legislative changes that could make it easier to take out such loans.

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