The Inter-American Development Bank (IDB) has approved a $50 million loan to help address the housing shortage in El Salvador by providing mortgage loans for social housing.
According to El Salvador’s Multipurpose Household Survey, an estimated 50.7% of the country’s households live in substandard housing with poor structural and physical conditions. Additionally, 28% of households are overcrowded, affecting the quality of life and well-being of their members. Programs that offer financing are thus key to improving housing conditions and promoting sustainability and climate resilience.
The “Financing Program for Sustainable, Inclusive, Low-Income Housing,” which has been approved by the IDB Board of Executive Directors, seeks to expand access to loans for purchasing new homes that have already been built. It targets underserved populations and promotes sustainable housing that is climate resilient and built in a way that mitigates emissions. The program’s resources will be channeled through the Fondo Social para la Vivienda (Low-Income Housing Fund).
Under this program, households that earn less than four times the indexed monthly minimum wage qualify for 30 year mortgages of up to $40,000 for low-income housing. Women and vulnerable populations, including people with disabilities, workers without formal employment and families receiving remittances will be given priority when selecting beneficiaries.
“Through this program, we aim to promote an inclusive and sustainable housing model that addresses the needs of low-income Salvadoran families, facilitating their access to mortgage credit and promoting the enjoyment and ownership of decent housing with adequate living conditions for this traditionally underserved population group,” said Olga Gómez, IDB representative in El Salvador. “This initiative reaffirms our commitment to improving the quality of life for Salvadorans by addressing their most fundamental needs, while also encouraging the adoption of environmentally responsible practices, contributing to a fairer and more sustainable future in El Salvador,” she added.
The $50 million IDB loan has a 25-year repayment term, a 5.5-year grace period and an interest rate based on the Secured Overnight Financing Rate (SOFR).
About the IDB
The Inter-American Development Bank (IDB) is devoted to improving lives in Latin America and the Caribbean. Established in 1959, the IDB partners with the public sector in the region to design and provide innovative, high-impact solutions for sustainable and inclusive development. Through financing, technical experience, and knowledge, it drives growth and well-being in 26 countries. Visit our website at https://www.iadb.org/en.
Molina Medina,Vanessa Carolina
Salgado Derqui,Javier Jose
El Salvador and the IDB
The Country Office of El Salvador aims to contribute to generating sustainable and inclusive economic growth, capable of facing current challenges and providing better opportunities and access to basic services for the population, thereby contributing to reducing levels of poverty and inequality.
Financing Program for Sustainable, Inclusive, Low-income Housing
The general development objective of the program is to contribute to the reduction of the housing deficit through the provision of mortgage credits for the acquisition of socially-interested housing. The specific objectives of the program are: (i) increase access to mortgage credit for the acquisition of housing serving underserved populations; and (ii) promote the adoption of sustainable housing.