In an era of challenging home markets and uncertain economic outlooks, one might be tempted to think that the dream of home ownership is further than ever away from those in the “low income” classifications.  In Lancaster PA and many other areas, however, community advocates are using an effective tool to extend the hope of escaping the rental racket. 

They’re called IDAs nationally, which stands for Individual Development Accounts.  Basically, they’re similar in concept to an IRA, but with a critical difference: for every dollar invested, an equal or greater amount is matched by the fund.  With associated classes in money management and financial planning, IDAs are a powerful tool to offer renters the ability to save and buy their first home (or other major asset).

Of all the initiatives that government engages in on behalf of the working poor, encouraging asset building is in my opinion the most valuable.  It’s using public and private funds wisely by partnering with wage earners rather then offering handouts.  As a Realtor, I’m particularly enthused about the sense of accomplishment that someone feels who has just bought their first home – I’ve seen it many times up close and in person.  IDAs are opened in conjunction with approved banking institutions and caseworkers meet regularly with participants to assist with budgeting, planning and follow-through.  People living in a negative net situation are given concrete tools to move them from spenders to savers.  IDAs are making headlines, too: There’s a good article on some successful IDA programs in Houston, Texas from World Magazine here.

According to the Corporation for Enterprise Development (CFED) there are 18 IDA programs in Pennsylvania.  Here in Lancaster County, Tabor Community Services offers 2 flavors of IDA: The Family Savings Account program (FSA) that produces a matching grant of $1 for every $1 invested by the participant, and the Matched Savings for Independence program (MSI) which is tailored for female household heads and boasts a $3 match per $1 invested.  I spoke with Program Coordinator Michelle Larsen and she agreed “they are a great tool for enabling asset purchase for low-income families” in Lancaster City and County.

Under the Family Savings Account (FSA) program, applicants must save for a minimum of 12 months and meet government standards for low-income households including a $10,000 maximum net worth.  Funds from the account must be used for one of the following:

1. Home purchase
2. Home improvement
3. Vehicle Purchase
4. Education (self or child)
5. Small Business startup or expansion

The guidelines for the Matched Savings for Independence program are that the applicant save for 6-36 months and meet the same household requirements as the FSA program, except that it’s restricted to households headed by women.  Funds can be used for the same asset goals except a vehicle purchase or home improvement.

According to Michelle Larson, availability “changes regularly as we offer slots intermittently through out the year”. The best way to find out what’s available is by contacting either Michelle (717-397-5182 ext 104) or caseworker Tim Charles (717-397-5182 ext 106).

FSA applications are available and potential clients should contact Michelle or Tim for a personal interview.  Potential MSI clients need to attend a group orientation.  The next one is scheduled to Wednesday, April 15.  For more information on Lancaster PA IDAs and other low-income assistance programs visit www.Tabornet.org.

I’m impressed by the personal responsibility inculcated by IDAs, and the outcomes are hard to argue with.  Washington take note – it CAN be done at a local level.  Be sure to share this article with a friend and see if your municipality or county is offering a similar program – use the CFED program list as a guide.  Let’s help promote self-reliance and the American ideal of giving each other a hand up.

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 For Lancaster PA homes for sale click here. Jeff Geoghan is a top real estate expert in Lancaster County, PA, and an involved community member. Jeff's work has been featured in the Lancaster Newspapers, WGAL Channel 8, PA Business Journal and Wall Street Journal. Jeff's blog on Lancaster County and its homes is nationally-featured. Contact Jeff for more help with your Lancaster PA Real Estate needs.