Improving Access to Housing Finance for Low-Income and Informally Employed Segments in Colombia

Project Development Objective (PDO)

This project aims to help expand access to affordable, sustainable, and market-based housing finance, especially among informally employed and lower-income households.


The inability of lenders to assess income and repayment capacities and therefore accurately estimate the credit risk of informally employed borrowers has limited the sound expansion of the housing finance market for the low-income population in Colombia. Additionally, many Colombian households are unable to accumulate enough savings to provide the required 15–20 percent down payment for a new housing unit. To address this issue, Fondo Nacional Ahorro (FNA) is looking to develop and launch an innovative product called “residential leasing with savings.”

FNA has requested FIRST (Financial Sector Reform and Strengthening) funding to support the design and implementation of a residential leasing product called TACS (Tasa al Ahorro Construyendo Sociedad). FNA has also initiated the preparation of a pre-feasibility analysis of TACS. The main characteristic of the TACS product is that it will incorporate a savings component not only prior to the contract but also during the contract, generating additional incentives to borrowers. Apart from financing, FNA has expressed interest in the technical assistance from World Bank experts to accompany the product development given the product’s innovation and potential for replicability.


The main activities of the proposed project are to do the following:

1.  Review FNA’s products targeted to informal households and low-income formal employees. 

2.  Develop and implement a residential leasing product in FNA, targeted toward low-income and
     informally employed households.

3.  Design a credit score system for informal workers and low-income formal employees. 

4.  Disseminate the credit score system and residential leasing product to relevant stakeholders.

Expected Outcomes

The expected medium-term outcomes are as follows:

1.  Have the credit scoring system designed and applied by FNA to give FNA staff a better
     understanding of borrowers’ creditworthiness during the credit appraisal process.

2.  Have the residential leasing product(s) designed and subsequently launched by FNA for low-
     income households as an alternative for house ownership.

3.  Increase awareness of the credit scoring system and residential leasing product(s) to interested
     stakeholders in the market.