Homes in Texas colonias range in quality from substandard to well-built—from hybrid dwellings combining RVs or trailer homes with wooden or cinder block additions, to brick or stucco homes built on cement foundations.

A major housing issue for colonia residents is affordability. Recent infrastructure improvements have dramatically increased the cost of lots. If a family is able to purchase a lot, they may not have sufficient funds remaining to spend on home construction and utilities, which can lead to costly renovations to stay up to code or fines. It’s not uncommon for extended families to live together or to build modest homes on the same lot to share expenses. Small-business owners in colonias often base their businesses in the front rooms of their houses or on their lots to reduce costs.

According to the Texas Department of Housing and Community Affairs (TDHCA), the homeownership rate in Texas colonias is 77 percent, as compared to the state average of 64.8 percent. Colonia homes provide a means to secure a brighter future and long-term stability, sometimes becoming an asset for future generations.

While homeownership can serve as a financial asset-building opportunity, this is not always the case for colonia residents. Because land purchases are typically self-financed through contracts for deed (CFDs), the buyer does not gain immediate equity in the property. CFDs are compared to rent-to-own contracts where the buyer doesn’t gain equity until the final payment is made and the title is transferred. Colonia residents continue to rely on CFDs instead of traditional purchase contracts because they may not qualify for a mortgage or may not have a relationship with a bank or credit union.

The need for safe, affordable housing currently exceeds the capacity of housing organizations to build due primarily to lack of capital. A major challenge in colonia housing markets is finding financial institutions willing to lend and county governments willing to get involved.