Ummeed Housing Finance receives a $20 million loan from the US International DFC.

The US International Development Finance Corporation (DFC) has approved a $20 million long-term loan for Gurgaon-based Ummeed Housing Finance to help fund housing needs for economically disadvantaged and middle-income people.

According to Ummeed’s creator and managing director Ashutosh Sharma, the American finance group will provide the debt at a fixed rate of 4.25% for 15 years.

“We would be able to provide longer-term credit to the underbanked population through this DFC facility to assist with home purchases, construction, and extension.” This will also assist us in diversifying our liabilities wagon wheel as interest rates are low.

He estimated that the total blended cost of this borrowing, including the hedging cost, would be between 8 and 9% over five years. The loan is subject to a two-year moratorium.

The debt would be worth Rs 160 crore in local currency, and the corporation intends to begin drawing down the capital over the next three months. The lender intends to use this to fund approximately 2,000 low-cost mortgages.

“This is a significant transaction that will provide critical financing to support increased access to affordable housing in India,” said James Polan, vice president of the DFC’s development credit division.

With increased urbanization, a growing middle-class population, and consistent policy support from the government, affordable housing finance in India has gained substantial traction in recent years and is anticipated to see additional expansion.

Given the prospects for expansion, Ummeed intends to raise stock from both existing and new investors next year. Norwest Venture Partners, Lightrock, and local investor CX Partners hold 74% of the company, with the remaining shares held by Sharma and other key workers.

Since its inception in 2016, the mortgage lender with an emphasis on affordable housing, with an average loan size of roughly Rs 9 lakh, has amassed Rs 1355 crore in assets under management by the end of August, with the goal of increasing it to Rs 1800 crore by the end of the current fiscal year.

“Our program encourages women to co-own these loans and properties,” Sharma said.

The lender intends to expand its branch network from 86 to 100 by the end of the year. At the end of FY23, there were 70 branches, with 84% located in tier 2 and lower municipalities.