What is Shared Equity Homeownership and Can it Fill the Gap?

For generations, the American Dream has been synonymous with homeownership and the stability, community, and wealth-building opportunity it affords. However, stagnating incomes, higher housing costs, and a severe lack of housing supply are major factors putting homeownership out of reach for millions.  

Shared equity homeownership (SEH) models offer possible alternatives to drive homeownership accessibility. SEH models offer a unique strategy; a non-profit or mission-driven entity creates an affordable home for a family, who in turn abide by resale value restrictions, keeping the home affordable for generations to come. One of the most prominent SEH models is Community Land Trusts (CLTs). There are over 300 CLTs across the country. 

CLTs occupy a critical and underserved place in the housing landscape; they are more stable than renting, yet more accessible than the traditional homeownership market. Because CLTs follow a SEH model, a one-time subsidy results in permanent impact. A CLT home provides a stable mortgage, a chance to build savings, and a genuine on-ramp to long-term financial stability for families who've been stuck in the rental market. Only 1.3% of CLT homeowner mortgages were delinquent compared to 8.57% in the national market. Additionally, six in ten CLT homeowners go on to become traditional market-rate homeowners. The data confirms that CLTs help homeowners reap financial benefits and prevent displacement and stabilize communities.  

While SEH models provide several benefits to families and communities alike, they also present a financing profile that traditional lenders aren't built to handle. The same resale restrictions that make the model so powerful by keeping homes affordable in perpetuity, create collateral structures and return profiles that fall outside conventional lending parameters. That financing gap is real, and it's exactly the kind of gap NHT exists to fill. 

Throughout our history, NHT’s two CDFIs have been at the forefront of advancing SEH models. Founded in 1967, the Institute for Community Economics (I.C.E.) was one of the first community development loan funds that pioneered responsible investments to create affordable homeownership. Today, NHT’s portfolio contains several SEH models including community land trusts (CLTs), limited-equity cooperative (LECs), and deed-restricted units.  

In the last two years, NHT has deployed over $22 million in funding to support 21 currently active homeownership loans totaling over 600 permanently affordable homes. Of this, more than $13.9 million was to CLTs. Beyond supporting one CLT project at a time, NHT is now focused on helping CLTs grow at scale.  

Our recent funding activity includes $2.4 million in four enterprise level loans, created in partnership with the Robert Wood Johnson Foundation (RWJF), to serve as flexible capital for operations, site acquisition, development, and predevelopment activities. NHT’s Amazon Homeownership Initiative (AHI) has deployed nearly $20 million since the initiative launched in September 2023, with the goal of creating 800 permanently affordable homes.  

Each loan has a critical preservation story – making the dream of homeownership more accessible, one family and one community at a time. NHT is proud to be a flagship lender, working with organizations leading SEH models. With our legacy and experience in homeownership lending, NHT’s RWJF and AHI pilot programs support and promote shared equity models across the country. Over the next few weeks, in celebration of National Homeownership Month, NHT Updates will dive deeper into the history of I.C.E., including rich stories of our past homeownership loans, and more details about our ongoing programs and initiatives.  

Owning a home not only creates wealth for families through appreciation, but studies show that renters experience a higher housing cost burden that further widens the wealth disparity between renters and homeowners. SEH models are one way to achieve the benefits of homeownership while securing financial and community benefits for generations to come. Homeownership continues to be a pathway to stability in the U.S., and SEH makes that pathway more accessible.