Jeff Palmberg faced a dilemma.
The veteran youth pastor had been called to a new church near Seattle, a great opportunity for him and his family. The congregation welcomed them with open arms and wanted them to live near the church.
But housing prices in the community were beyond the pastor’s means. Even a modest home could cost more than $800,000. So, the church offered to help—lending Palmberg enough money for a down payment on a home his family could afford.
That kind of sticker shock is not uncommon for pastors, said CPA Rob Faulk, a partner with CapinCrouse, especially in major cities or other high-priced areas. In response, sometimes the church loans the pastor money for a down payment, while in other cases the church and pastor own the property together. Such arrangements can seem especially appealing right now: housing prices in most markets continue to climb nationwide, and the constitutionality of the housing allowance benefit for ministers remains a question mark, due to ongoing court challenges.
But both loans and co-owner partnerships require caution. Such arrangements can be risky, said Faulk and Frank Sommerville, an attorney, CPA, and editorial advisor for Church Finance Today.
We recently spoke with Faulk and Sommerville about how loans and co-owner partnerships can work—and the challenges churches and pastors face with both approaches.