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LMI Lending: Considerations For Success

Lending in low- to moderate-income (LMI) areas and households is a cornerstone to successfully complying with the Community Reinvestment Act (CRA). One often-overlooked component of LMI is making sure lending products and credit guidelines fit the needs of borrower profiles.  

FHA and government bond programs make up 21% of production in LMI areas, compared with 13% in non-LMI areas. And programs like down-payment assistance, HomeReady/Home Possible and First-Time-Homebuyer, as well as general accessibility/affordability programs, make up twice the production in LMI areas than in non-LMI areas (see chart).  

Credit scores below 700 and LTVs above 90 comprise just over 20% of all lending in LMI areas, compared to ~13% in non-LMI areas. This spread translates to LTVs that are five points higher in LMI areas and credit scores that are 14 points lower. Even holding product constant, the rates in LMI areas are generally a quarter-point higher than non-LMI – adding an added financial barrier to borrowers.  

The nuances in lending profiles are quite layered, but understanding their distinctions can be the difference between a “Needs to Improve” and an “Outstanding” rating. That’s why it’s imperative that lenders understand the needs and profiles of the borrowers in the communities they serve – and translate that into a refined program and credit offering – to derive the most success and overall impact from their lending programs.  

Product Composition by Area Type​
(% by Unit, Funded in 2024)​

Loan Programs by Region Type
(% by Unit, Funded in 2024, excl. Non-Conforming)

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