Before New York City’s current Comptroller, Mark Levine, became an elected official, he helped found the Neighborhood Trust Federal Credit Union in Washington Heights in 1997. Since its founding, the financial institution has provided more than $100 million in loans to families and small businesses in Northern Manhattan and the South Bronx. For this reason, it is no surprise that Levine, who now serves as the City’s top investment and asset advisor, is promoting CDFIs as a way to help a wider range of borrowers enter New York City’s tough housing market.

What Are CDFIs?

A CDFI (Community Development Financial Institution) can refer to several different types of financial institutions. Whatever form they take, they share a common mission: to expand economic opportunities, provide financial education, and offer affordable credit to under-resourced communities.

The four primary types of CDFIs are:

• Community Development Credit Unions (CDCUs)

These are usually member-owned, non-profit financial co-ops, often serving specific communities or even workers in specific professions.

• Community Development Banks

These are for-profit banks but with mandates to serve low- and moderate-income communities.

• Community Development Loan Funds (CDLFs)

These are usually non-profit organizations that offer financing for specific purposes such as housing or business purchases rather than a full range of banking services.

• Venture Capital Funds

While generally associated with the start-up world, VC funds sometimes also operate as CDFIs, but only if they are structured with a mandate to invest in businesses operating in under-resourced communities.

Why They Are Needed

As anyone who has undergone underwriting knows, getting approved isn’t easy. If you’re a newer immigrant, earn income from multiple jobs (e.g., 1099 work) rather than a single salaried position, or have ever run into financial challenges in the past (e.g., defaulted on a credit line or loan), it can be particularly difficult to gain access to mortgage products, even if you are currently a low-risk and creditworthy candidate. This is where CDFIs often help. By taking a more individualized and local mission-driven approach to financing, CDFIs help bridge the financing gap for thousands of creditworthy New Yorkers each year and, in the process, continue to diversify who owns versus rents citywide.

How CDFIs Make Buying More Affordable and Diversify Ownership

As Mark Levine’s recent report on CDFIs reveals, CDFIs directly affect who can obtain financing to buy a home in New York City, but a few statistics are especially notable.

Asian and Pacific Islanders, who include many of the City’s newest immigrants, are particularly likely to benefit from access to CDFIs, though many of these loans originate with just two institutions: Royal Business Bank and Quontic. Among lower-income households, CDFIs also offer higher mortgage approval rates than non-CDFIs. For example, applicants making under $75,000 are substantially more likely to qualify for a CDFI than a non-CDFI loan (88% vs. 69%).  In general, as the Comptroller’s report emphasizes: “Across the demographic and socioeconomic dimensions…New York’s CDFIs reach further into populations that are less likely to be able to buy a home with a conventional bank or credit union.” Also, as more people buy, there are also “positive spillover effects on nearby property values and neighborhood stability.”

That said, even with higher approval rates, CDFIs are not entirely advantageous. Between 2018 and 2025, the average interest rates offered by CDFIs were higher than those on non-CDFI loans, suggesting that lower-income borrowers may still be penalized by the very financial institutions designed to lift them up.

The City’s Future Plans for CDFIs

While Comptroller Levine’s current report doesn’t offer any concrete recommendations on what might come next for the City’s CDFIs, the recent publication of the report suggests they may play a key role in Mayor Mamdani’s plan to make housing more affordable to New Yorkers, including on the buying side of the market.  What is clear is that as housing costs continue to rise and underwriting rules become more stringent at the federal level, there has never been a greater need for a community-based approach to lending and consumer lending education.