In the 1970s and 1980s, mortgage interest rates climbed into the double digits and peaked above 18%. With rates like that, you needed more than a steady job and a down payment to buy a home — you needed creative financing ideas. 

Today’s market challenges may look different, but the response has been surprisingly familiar: unusual financing methods are making a comeback, along with some new ones that didn’t exist decades ago. Here is a brief overview of the most popular tools from that era. 

Assumable Mortgages were available with FHA, VA, and USDA loans and, until 1982, even Conventional mortgages. They allowed a buyer to take over the seller’s existing mortgage, including its interest rate, rather than getting a brand-new loan, while compensating the seller for the difference between the assumed loan balance and the contract price.

Often, a seller played a substantial role in a purchase. With Seller Financing (Owner Carry) the seller became the bank, letting the buyer make payments directly to them instead of to a traditional lender.

One variation on Seller Financing was the Land Contract. The seller was still the lender, but the buyer made loan payments to the seller, who then paid his own mortgage and pocketed the difference. The buyer would receive equitable title (the right to use and occupy the property), while the seller kept the title or deed until the contract was paid off or the property sold.

With Wraparound Mortgages, the seller created a new, larger loan for the buyer that “wrapped” around the existing mortgage at an agreed-upon rate. The buyer would then pay the seller, who would continue making mortgage payments on the existing balance, collecting payments and pocketing the spread. Whether title conveyed to the buyer or remained with the seller was negotiated between the parties. 

Unlike an assumption, when buying a home Subject To an existing mortgage, the buyer took title to the property and agreed to pay the seller’s mortgage directly to the lender plus any equity to the seller; the mortgage stayed in the seller’s name. Now, most mortgages have a Due on Sale clause that prohibits this kind of transaction without the expressed consent of the lender. 

Rent-to-Own was also a popular way to get into a home. While a potential buyer rented a property, the seller would offer an option to purchase for a set amount to be exercised at a later date (lease option) or allow a portion of the rent collected to be considered as a downpayment once accrued (lease purchase).

Graduated Payment Mortgage (GPM) loans were authorized by the banking industry in the mid-1970s and Adjustable Rate Mortgages (ARM) surfaced in the early 1980s. Both featured low initial payments that gradually increased over time. 

With the GPM, although lower than market to start, the interest rate was fixed and payment increases were scheduled. A buyer could rely on the payment amount and save accordingly. 

ARMs, on the other hand, had interest rates that could change based on the market index, with less predictability and a higher risk of rate shocks, as we saw during the Great Recession from 2007-2009.

While mortgage rates today aren’t anywhere near the extremes of the 1980s, buyers still face a tough environment: higher prices, limited inventory, and stricter lending standards. That combination has pushed people to explore tried and true alternatives and add new ones. 

Assumable mortgages and ARMs are on the table again and seller financing is still worth exploring. Just last week, I overheard a colleague asking about a land contract.

Lenders are beginning to use Alternative Credit Evaluation indicators, like rental payment history or bank cash-flow analysis, to assess borrower strength when making mortgage loan decisions.

There are Shared Equity Programs, where companies or nonprofits contribute part of a down payment in exchange for a share of the home’s future appreciation. With Crowdfunding Platforms, investors pool money online to finance real estate purchases or developments.

Another unconventional idea being debated today is the 50-year mortgage, designed to help buyers manage high home prices. Such a mortgage would have a 50-year repayment term, rather than the standard 30 years, lowering monthly payments by stretching them over a longer period.

Supporters argue that a 50-year mortgage could make monthly payments significantly more affordable for first-time buyers who feel priced out of the market. Critics, however, warn that while the monthly payment may be lower, the lifetime interest cost would be much higher.

What ties the past and present together is necessity. As long as affordability remains strained, creative financing – old and new – will continue to shape the way real estate gets bought and sold. As with everything real estate, my question will always be, “What’s next?”

Valerie M. Blake is a licensed Associate Broker in D.C., Maryland, and Virginia with RLAH @properties. Call or text her at 202-246-8602, email her at [email protected] or follow her on Facebook at TheRealst8ofAffairs.

Before the interest rates shot up around 2022, many buyers were making moves due to a sense of confinement, a sudden need to work from home, desire for space of their own, or just a general desire to shake up their lives.  In large metro areas like NYC, DC, Boston, Chicago, Miami and other markets where rents could be above $2k-$3k, people did the math and started thinking, “I could take the $30,000 a year I spend in rent and put that in an investment somewhere.”  

Then rates went up, people started staying put and decided to nest in the new home where they had just received a near 3% interest rate.  For others, the higher rates and inflation meant that dollars were just stretching less than they used to.  

Now – it’s been five  years since the onset of the pandemic, people who bought four years ago may be feeling the “itch” to move again, and the rates have started dropping down closer to 5% from almost 7% a few years ago.  

This could be a good opportunity for first time buyers to get into the market.  Rents have not shown much of a downward trend. There may be some condo sellers who are ready to move up into a larger home, or they may be finding that the job they have had for the last several years has “squeezed all the juice out of the fruit” and want to start over in a new city.  

Let’s review how renting a home and buying can be very different experiences:

• The monthly payment stays (mostly) the same.  P.I.T.I. – Principal, Interest, Taxes and Insurance – those are the four main components of a home payment.  The taxes and insurance can change, but not as much or as frequently as a rent payment. These also may depend on where you buy, and how simple or complex a condo building is.
• Condo fees help pay for the amenities in the building, put money in the building’s reserve funds account (an account used for savings for capital improvement projects, maintenance, and upkeep or additions to amenities)
• Condos have restrictions on rental types and usage – AirBnB and may not be an option, and there could be a wait list to rent.  Most condo associations and lenders don’t like to see more than 50% of a building rented out to non-owner occupants.  Why?  Owners tend to take better care of their own building. 
• A homeowner needs to keep a short list of available plumbers, electricians, maintenance people, HVAC service providers, painters, etc.
• Condo owners usually attend their condo association meetings or at least read the notices or minutes to keep abreast of planned maintenance in the building, usage of facilities, and rules and regulations.  

Moving from renting to homeownership can be well worth the investment of time and energy.  After living in a home for five years, a condo owner might decide to sell, and find that when they close out the contract and turn the keys over to the new owner, they have participated in a “forced savings plan” and frequently receive tens of thousands of dollars for their investment that might have otherwise gone into the hands of a landlord.  

In addition, condo sellers may offer buyers incentives to purchase their home, if a condo has been sitting on the market for some time. A seller could offer such items as:

• A pre-paid home warranty on the major appliances or systems of the house for the first year or two – that way if something breaks, it might be covered under the warranty.
• Closing cost incentives – some sellers will help a cash strapped buyer with their closing costs.  One fun “trick” realtors suggest can be offering above the sales price of the condo, with a credit BACK to the buyer toward their closing costs.  *there are caveats to this plan
• Flexible closing dates – some buyers need to wait until a lease is finished.
• A seller may have already had the home “pre-inspected” and leave a copy of the report for the buyer to see, to give them peace of mind that a 3^rd party has already looked at the major appliances and systems in the house. 

If the idea of perpetual renting is getting old, ask a Realtor or a lender what they can do to help you get into investing your money today. There are lots of ways to invest, but one popular way to do so is to put it where your rent check would normally go. And like any kind of seedling, that investment will grow over time. 

Joseph Hudson is a referral agent with Metro Referrals. He can be reached at 703-587-0597 or [email protected].

When federal paychecks disappear, the shock doesn’t stop at the Beltway. It lands on the doorsteps of the region’s property owners, those who rent out their rowhouses in Petworth, condos in Crystal City, and homes stretching into Montgomery and Prince George’s counties. Landlords depend on steady rent from tenants employed by the very institutions that are now downsized or worse, shuttered.

This fall, Washington’s economic identity is being tested once again. Thousands of federal workers who accepted “deferred resignation” packages will soon lose their income altogether. And with a long government shutdown looming, even those still on the payroll face delayed paychecks. For landlords, that combination of uncertainty and sudden income loss threatens to unsettle a rental market already balancing on the edge.

A Test of Resilience

Rosie Allen-Herring, president of United Way of the National Capital Area, recently told The Washington Post, “This region stands to take a hard hit from those who are no longer employed but can’t find new employment and now find themselves in need. It’s a full-circle moment to be a donor and now find yourself in need, but it is very real for this area.” ¹ That reversal captures the broader moment: The D.C. economy built on federal paychecks and charitable giving now faces a stress test of compassion and cash flow alike.  

For landlords, adaptability will determine who weathers the storm. Those who are able to keep the rent coming in, retain their tenants or find replacement tenants without the same economic hardships are going to be able to get to the other side with manageable financial disruptions. Those who plan, communicate, and stay financially flexible will keep their properties occupied and their reputations intact.

A Region Built on Federal Pay

Roughly one in ten jobs in the Washington metropolitan area is tied directly to the federal government, according to the Bureau of Labor Statistics. That number climbs sharply when you include contractors, nonprofits, and think tanks dependent on federal funding. 

This concentration means that when the federal government sneezes, D.C.’s housing market catches a cold. The Brookings Institution recently reported that since January, the region’s unemployment rate has climbed eight times faster than the national average, and local job growth has flattened. ¹  More anecdotal, I’ve spoken with property owners this year who are looking to rent out the property they own in DC because they have to move to another region for work.

As The Post observed, “The region has shed federal jobs at a higher rate, and both the number of homes for sale and the share of residents with low credit scores have grown more quickly here than the rest of the country.” ¹

For landlords, that’s a flashing warning light. When a certain category of tenants with solid compensation lose reliable government salaries and face dim re-employment prospects, rent becomes harder to collect and rent levels can decline year on year.

The Human Side of a Policy Shock

The people behind these statistics are often long-tenured civil servants. The Post profiled former State Department employee Brian Naranjo, who said he had “unsuccessfully thrown his résumé at more than 50 positions since resigning in May.” “It’s terrible,” Naranjo told the paper. “You have far more people going for those very specialized jobs than would normally be out there.” ¹

Another displaced worker, Jennifer Malenab, a 42-year-old former Department of Homeland Security employee, described canceling daycare and family vacations while she scours job boards. “This is not where you want to be at 42, with a family,” she said. ¹

When households like these lose steady pay, not only do they pull back on spending, but if they are renters landlords may see a lag in rent receipts, requests for partial payments, or in some cases, a premature notice to vacate. Some tenants will relocate out of the region altogether — a prospect already visible in rising “for sale” listings and increased moving-truck activity in Northern Virginia and suburban Maryland.

What Happens When the Rent Doesn’t Arrive

When rent payments are disrupted, even temporarily, the financial effects can be immediate. Many small landlords depend on rent to cover their mortgages, property taxes, insurance premiums, and routine maintenance. Even a temporary interruption in income can deplete reserves, delay repairs, and strain their ability to meet loan obligations.

Larger multifamily owners are not immune. If multiple tenants in a building lose income at once, cash flow can fall sharply. During the brief 2019 government shutdown, some D.C. landlords offered short-term payment plans to furloughed workers with the expectation of eventual back pay. However, under current conditions, where many positions are being permanently eliminated and paychecks may not be restored, landlords face much greater uncertainty and cannot assume repayment will be guaranteed.

In the District of Columbia, the Rental Housing Commission has advised landlords to continue operating strictly within established legal procedures and to avoid informal or selective payment arrangements that could be interpreted as discriminatory under the D.C. Human Rights Act. Courts in Virginia and Maryland allow temporary continuances when tenants provide documentation of a federal furlough or income disruption, but it is the court, not the landlord, that determines eligibility for relief.

How Landlords Should Proceed  

• Continue filing nonpayment cases through normal legal channels rather than delaying action.
• Allow the courts to apply any continuance or relief provisions if a tenant qualifies due to federal employment status or income interruption.
• Avoid making selective accommodations based on a tenant’s job type or federal employment status, as this may violate equal-treatment and source-of-income protections.

Landlords with a single tenant or a consistent written policy of offering payment plans to all tenants experiencing verified income disruption should not be at risk of discriminatory treatment. 

Vacancy, Concessions, and Shifting Demand

Beyond nonpayment of rent, landlords face a challenge from a different direction: weak demand. As fewer jobs are being created and unemployed or under-employed tenants move out of DC, the supply of available rental units will rise, forcing landlords to compete more aggressively on price and amenities.

Market data already point that direction. The volume of rental listings across the District of Columbia jumped roughly 14 percent year-over-year in September, according to the realtor Multiple Listing Service (MLS) trends, as reported by the Washington Business Journal. Landlords are offering free parking, one-month concessions, or flexible leases to retain quality tenants.

Neighborhoods once buffered by federal stability like Silver Spring, Falls Church, and Alexandria may now see higher tenant turnover. As one Arlington property manager put it, “We used to say federal employees were the safest tenants in America. Now we’re rewriting that rule.”

A Shrinking Workforce, a Softer Market

In addition to the layoffs, the region is contending with a broader identity crisis. “Yesim Sayin, executive director of the D.C. Policy Center, put it bluntly: ‘Beyond federal employment, we relied on tourism. But foreign tourists aren’t coming. And we relied a whole lot on universities bringing talent who would then stay here and be part of our talent pool. And that is kind of gone, too. So what are we now? We just don’t know.’” 1

This uncertainty may impact property values and investor sentiment. When employers relocate, renters follow. If enough mid-career professionals leave, demand for rentals will first soften and then we’ll begin to see a lowering of the average rents a landlord can command for their rental. We have already seen this in the current rental market. Rents that seems reasonable a few years ago, are now being discounted by hundreds of dollars. Landlords who are searching for new renters after several years of having tenants are finding that they need to bring rent levels below where they used to be to secure tenants commitments.

Strategies for Landlords: Staying Solvent and Supportive

In times like these, survival depends on both prudence and empathy.

1. Communicate early. Encourage tenants to disclose financial hardship before missing payments. Written payment plans, properly documented, can forestall eviction while preserving goodwill.

2. Review legal protections. Understand D.C., Maryland, and Virginia rules regarding furlough continuances or income-source discrimination. Seek legal counsel before altering lease terms mid-cycle.

3. Build reserves and credit access. Line up a home-equity or business line of credit to bridge shortfalls. Cash on hand always is helpful to have as a buffer for the impact of income disruption. 

4. Monitor policy developments.  State and local governments are supporting people who are affected by the lay-offs. Landlords can benefit indirectly through their renters who are utilizing these programs to assist them in paying their monthly expenses. 

5. Contact your Congressional representatives to demand the reopening of the federal government. And in D.C., you do benefit from representation, even though they cannot vote. They can influence decisions that matter. 

Scott Bloom is owner and senior property manager of Columbia Property Management.