FUNHAVI's Housing Microfinance Program in Mexico

This assessment examines a young and small institution that is still experimenting with its lending methodology. FUNHAVI serves maquiladora workers on the US-Mexico border with co-signers to secure housing loans. Sees that:

• Costs are high relative to other microfinance institutions;
• scale is small, particularly given the estimated market demand and apparent lack of real competition.

Assessment reveals observations and lessons useful to the emerging practice of housing loans for the poor:

• Using leverage to negotiate bulk rates on construction materials can increasea microfinance institution's income and reduce financing costs to clients. FUNHAVI's net income from this non-loan service was 11 percent of FUNHAVI's operating income in 2001;
• Housing-focused microfinance institutions can potentially find a viable niche in the market - under certain conditions, housing microfinance may be able to sustain a small- to mid-sized microfinance institution in a manner that is financially viable.