Analyzing Access to Housing Finance and its Implications for Low-Income Earners in Siaya, Bondo, and Ugunja Towns, Siaya County, Kenya

Abstract

Statement of the Problem: Limited access to housing finance remains a significant barrier for low-income earners in Kenya's secondary urban centers. Despite government initiatives like the Affordable Housing Program, structural challenges including high interest rates, stringent eligibility criteria, and complex application processes continue to exclude informal sector workers from formal housing finance systems. Purpose of the Study: This study examined housing finance accessibility for low-income earners in Siaya, Bondo, and Ugunja towns, Siaya County, Kenya, focusing on mortgage availability, affordability barriers, and regulatory constraints limiting inclusive finance access. Methodology: A mixed-methods design was employed with 383 household respondents selected through stratified random sampling and 12 key informant interviews from financial institutions. Data analysis used SPSS 26.0 for quantitative data and thematic analysis for qualitative responses. Research Findings: Formal housing finance remains largely inaccessible, with 59.32% of respondents finding finance options unaffordable and 62.66% citing unreasonable interest rates. Only 28% found housing finance easily accessible, while 57.33% reported complex loan processes. Government programs showed limited impact (17.33% effectiveness), forcing households to rely on informal borrowing and rental arrangements. Conclusion: Low-income families face significant housing finance barriers due to high costs, opaque policies, limited financial literacy, and restrictive eligibility criteria, resulting in widespread financial exclusion despite growing housing demand. Recommendation: Financial institutions should develop flexible, low-interest products for informal workers. Government should expand targeted housing programs and address structural barriers.