Latin America & the Caribbean

Inter-Mac International Inc.: Supporting home ownership for low-income Hondurans

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Country Honduras
Sector Housing

Challenge A severe shortage of safe, affordable housing and mortgages for low-income families, and limited financing to support local development.

Solution In 2007, OPIC agreed to provide a $70 million loan to Inter-Mac International, Inc., to support construction and long term financing for up to 10,000 houses in Central America, beginning in Honduras.  The new basic housing units are equipped with electricity, running water and sanitary facilities, in safe, gated communities. Inter-Mac is also providing lease-purchase financing to enable low-income families to own these homes without subsidies from their employers or the government.

Impact In 2010, homebuyers moved into the first group of houses in Los Castaños de Choloma, the first 2,400-unit housing community).  To date about 5,000 residents are living in safe and affordable housing and are on the path to savings and financial security.  An elementary school has been opened with more than 500 students from the community attending. The community also includes a central park with a playground, soccer fields, and basketball courts.

Program helps minimum wage workers buy a home
Much of the low-income population in Central America lives in informal, makeshift housing, which often lacks basic services like clean running water, electricity, sanitary plumbing, and even sufficient shelter.  Individuals working in low-wage jobs typically cannot access the mortgage financing from local banks to purchase a basic house, but that is not their only barrier to home ownership.  Local developers also lack the access to financing to enter into large-scale affordable housing development projects that include basic infrastructure to serve this population.

Low-income housing development

In 2007, OPIC agreed to provide a $70 million loan to Inter-Mac International Inc. to support low-income housing development throughout Central America, while at the same time providing long term lease purchase financing that would make the homes affordable to individuals and families earning minimum wage. Inter-Mac was created by a team of entrepreneurs at the U.S. real estate developer, Clark Realty Capital, and it began its work with a housing project in Choloma, Honduras, the sixth-largest and fastest-growing city in Honduras, which is also the most dangerous city in the world outside of a war zone. Inter-Mac’s developer partner in Honduras is HOLA Realty, a small local company focused on affordable housing construction.

OPIC and Inter-Mac developed a 27-year financing model that would allow families with incomes of one-
 to three times the minimum wage in Honduras to buy a basic, 380-square foot home. Under this deal structure, families would make a down payment of about $330 and start with a low monthly payment that will increase over time, presumably as their income grows with inflation, over a period of 25 years.  Homebuyers can purchase a $13,000 home for approximately $100 per month which is almost the same monthly amount they would otherwise pay to rent an informal structure lacking basic amenities like pluming.  The tenants/buyers can exercise their purchase option at any time for $1 plus repayment of the outstanding balance and transaction costs.

In 2013, HOLA won a Gold Nugget award for Castaños de Choloma from the Pacific Coast Builders Conference. A second phase of about 1,800 units is planned in Choloma, and potentially a third project in the Tegucigalpa area in the next two years.

See also: Why the world’s poor are a good credit risk

This project was featured in 2013