Transit supportive home loans: Theory, application, and prospects for smart growth

Abstract

This article discusses mortgage lending programs aimed at lower‐income buyers looking to purchase homes in compact, transit‐accessible neighborhoods. Unlike traditional lending formulas, the transit supportive home loans consider the transportation cost savings from living in transit‐friendly neighborhoods and applies these savings to a larger mortgage calculation. However, little has been published positioning the concept against the broader goals of smart growth, describing the application of the product, or commenting on its prospects. The first part of this article therefore draws heavily from the literature on smart growth to present the theoretical foundations of the transit supportive home loans and how they address growth management program goals. The second part describes the application of the concept, and the third examines the prospects for this tool and briefly comments on circumstances likely to bedevil its widespread adoption or overall impact.