A new pilot program between Profinium Bank and the city of Mankato to preserve and grow the affordable housing stock may not have a huge impact on affordable housing, but it offers another way to build affordable housing stock one home at a time.
We’ve long advocated for the region building and promoting more affordable housing, and we support the new pilot program.
The new program will not have an income requirement for those who apply for the slightly below market rate loans. That’s a new twist on creating incentives for affordable housing.
The rates will be between 4.99 percent and 5.9 percent for a 10-year loan and single-family homes that qualify must be valued at less than $200,000 and be at least 25 years old or older. The city’s role would be to do an inspection to determine if the project will need fixes to meet the building codes.
The low interest loan may create incentives for people to fix up their homes for eventual resale, thereby freeing up single family, starter home housing stock that is said to be in short supply.
Such improvement may add needed equity in homes so the owners can either sell or build more equity. The bank gains new customers and fulfills some of its community reinvestment commitments required under banking laws.
The new program will complement an existing program that provides low interest loans to homes in certain neighborhoods of the city that have older housing stock. That program does have an income requirement of the owner making 80 percent of the median family income of the area.
In the last three years, the multi-family affordable housing stock has grown exponentially in Mankato, with the addition of at least three large complexes that added nearly 150 units of affordable housing.
It’s good to see the city of Mankato taking its strategic plans seriously and continuing to chip away at the affordable housing issue. The need is great and with every new plan for affordable housing, our ability to meet the need is enhanced.