Ummeed Housing Finance receives a $20 million loan sanctioned by US International DFC.

In order to meet the housing needs of the economically disadvantaged and middle-class people, the US International Development Finance Corporation (DFC) has approved a $20 million long-term loan for Gurgaon-based Ummeed Housing Finance.

According to Ashutosh Sharma, the founder and managing director of Ummeed, the American fundraising organization will offer the debt at a fixed rate of 4.25% for 15 years.

“This DFC facility would allow us to extend longer tenure credit to the underbanked population to assist with home purchases, construction, and extension. This will also help us diversify the wagon wheel of liability while the funding is attractive from an interest rate perspective,” Sharma told ET.

He estimated that the total blended cost of this borrowing, including the cost of hedging for five years, would range between 8 and 9%. There is a two-year moratorium on the loan.

The loan would be about Rs 160 crore in local currency, and the corporation intends to begin using the money in around three months. With this, the lender intends to finance about 2,000 low-cost mortgages.

According to James Polan, vice president of DFC’s division of development credit, “this is an important transaction that will provide vital financing to support increased access to affordable housing in India.”

With increased urbanization, a growing middle-class population, and consistent legislative support from the government, the affordable housing financing in India has gained substantial traction in recent years and is anticipated to continue growing.

Given the potential for expansion, Ummeed intends to solicit new and existing investors for stock the following year. Together, Norwest Venture Partners, Morgan Stanley Private Equity Asia, Lightrock, and local investor CX Partners hold 74% of the company, with promoter Sharma and other key workers owning the remaining 26%.

Since 2016, the mortgage lender with an emphasis on affordable housing has developed assets under management totaling Rs 1355 crore as of the end of August. By the end of current fiscal year, it hopes to have reached Rs 1800 crore.

“Our strategy strongly encourages women co-ownership on these loans and properties,” Sharma stated. By the end of the year, the lender wants to increase its branch network from 86 to 100. At the end of FY23, there were 70 branches, 84% of which were in tier 2 and lower towns.