America's home builders are venturing into this market, turning these 'middlemen' into homeowners. They form partnerships with local governments, financial institutions and non-profit organizations to build high-quality homes sold at 'affordable' prices.

But what is 'affordable?' A home affordable to the average family in Washington, D.C. would be outrageously priced to the average family in Mansfield, OH. A family can spend approximately 30-35 percent of their annual income on a home. The new affordable housing targets buyers with incomes just below those who can afford new entry-level homes at market price; If the lowest-priced new homes in a market sell for $89,000, the new affordable housing will sell for approximately $75,000 to $88,000. In many communities, families earning less than 80 percent of area median income could purchase the new affordable housing.

Exemplary Affordable Housing Projects

One New Jersey builder produces homes priced at around $80,000, less than the surrounding area's market rate for comparable homes but more than its low-income housing. In this community, the 'middlemen' can now experience the benefits of homeownership, including the chance to build equity and improve their economic condition.

In Santa Fe, New Mexico, a nonprofit developer gives land to builders willing to build affordable housing on it. Then to promote the purchase of this affordable housing, the city of Santa Fe provides below-market-rate mortgages to qualified buyers.

Some builders integrate affordable housing with market-rate housing. This makes the affordable homes even more attractive to the low-middle income buyers. And better appreciation potential for home values in mixed-income neighborhoods offers all buyers a key benefit of home ownership. In Santa Fe, a builder completed a development with 40 percent of its homes targeted to buyers with incomes less than 80 percent of the market median, 40 percent to buyers with incomes ranging from 80 percent to 120 percent of the market median and 20 percent to market-rate buyers.

Several states now provide down payment assistance to prospective affordable home buyers. In New York, the state government offers mortgage assistance to 'middlemen' buyers, allowing them to buy a house with as little as $3,300 down. And in Omaha, Nebraska, a citywide lending consortium called Omaha 100 helps prospective homebuyers by paying for up to 20 percent of the required down payment. The consortium's goal is to finance 100 affordable houses each year.

In Houston, Texas, a city program called Homes for Houston provides closing-assistance of up to $9,500 for qualified buyers in new-home developments within the city. Qualified buyers with an income of 80 percent or less of the median income receive this money as an interest-free, soft second mortgage. The program then forgives the mortgage of families who live in the house for five years. Buyers with 80 percent to 100 percent of the median income receive $5,000 for closing assistance. Additionally, Homes for Houston provides counseling and education for these buyers who are, in many cases, the first homeowners in their families.

Builders don't sacrifice quality to build affordable housing. 'Affordable' homes are virtually the same product as entry-level market-rate homes. They are only financed differently. With the help of their partners, builders identify creative ways to reduce development and construction costs without producing an inferior product.

Most builders, for example, construct affordable housing on affordable land. When the local government writes-down the cost of land, it gives builders the chance to cut prices on housing. In fact, a write-down can mean the difference between marginally more affordable and significantly more affordable housing.

Many builders are following the latest trend and building affordable housing in inner city neighborhoods. These efforts provide affordable housing while breathing life back into our cities. A partnership recently formed by the Clinton Administration, the National Association of Home Builders and the Conference of Mayors has vowed to construct an additional one million new homes in the nation's cities and close-in suburbs over the next ten years.

If interested in finding out about affordable housing opportunities in your area, check with your local government or chamber of commerce.