Neighborhood Finance Corp. is celebrating its 20th year of providing loans to purchase and improve homes in Polk County neighborhoods.

The nonprofit mortgage lender traces its beginnings to a study commissioned in 1989 by the city of Des Moines and Polk County Board of Supervisors to grade the condition of the county’s neighborhoods and homes. At the time, Greater Des Moines was going through an economic development revival, with most of the focus downtown and in the western suburbs.

The need for efforts to rejuvenate older homes and provide some incentive for people to buy houses resulted in the creation of Neighborhood Finance Corp. the following year.

“The city and county really understood that they needed to do something,” said Holly Olson, the lender’s executive director.

Since 1990, the city and county each have provided about $1 million a year that is used as part of Neighborhood Finance Corp.’s forgivable loan program. In addition, the money can be used to help defray closing costs, make a down payment or pay for home improvements.

That program is part of the second seat on a bicycle built for two, Olson said. She uses the metaphor frequently when discussing the organization’s lending programs.

The first seat is reserved for the mortgage. Though often misperceived as a low-income lender only, Neighborhood Finance Corp. makes its market-rate loans available to people of all income levels. The caveat is that the mortgage must be for a home in a targeted neighborhood. Neighborhood Finance Corp.currently lends in the Douglas Acres, Drake, Fairground, Gray’s Woods, King Irving, Merle Hay, North of Grand, Sherman Hill, South Park and Waterbury neighborhoods.

The lender has the same underwriting standards as any other bank or mortgage company. Borrowers must show that they have the ability to repay the loan. The company has a default rate of no more than 2 percent.

Mortgages are averaging about $91,000, Olson said, with forgivable loans averaging $12,500.

In addition to its main function as a lender, Neighborhood Finance Corp. also has a tool loan program and offers courses and counseling on several areas related to home ownership.