The council had called for tenders to provide affordable housing services in the Wollongong local government area.

Read more: 20,000 Illawarra households in housing stress

The first two rounds of funding went to the Housing Trust and Head Start Homes, with the latter in line for a further $5 million in funding in the third round.

Councillors will vote on Monday night on whether to officially award the tender.

Head Start Homes founder and managing director Stephen Woodlands said the non-profit's approach was to effectively act as guarantor.

Successful applicants take out a loan worth 100 per cent of the value of the property but Head Start Homes will use the grant funding to place the equivalent of a 20 per cent deposit into an account so the bank had that security.

After a few years, when the loan to value ratio equals 80 per cent, that deposit is released and can be used to help another client.

"In all of the programs we operate, a key principle is the recycling of capital and providing a head start not a handout," Mr Woodlands said.

"We're empowering clients to do things by using traditional market mechanisms for new Innovations so they can have that equal access to home ownership but we're not ever providing them funding for home ownership."

Mr Woodlands said the focus was on Wollongong in part because of the council funding but also the housing market allowed their model to operate effectively.

"The market in the Wollongong local government area is different to the Sydney market," he said.

"Wollongong, it's one of the regional areas that have gone up the most in terms of house prices but there are still pockets within that area that are more favourable for our clients, such as Dapto and areas like that.

"It's absolutely a consideration for us - we need to ensure that we're going into areas where our clients can service and afford a loan."

The service is available to people who meet income thresholds set by the NSW government for social or affordable housing and they need to be purchasing a home worth under $550,000.

Wollongong councillor David Brown was on the panel that assessed the various tenders.

He said that, while the council was part of the solution in terms of affordable housing, it wasn't "the major player".

"We say that our main role is the consent for land use, getting the zoning rights and also making sure that, where we can, put in affordable housing schemes into developments where developments above a certain size have 5 per cent of affordable housing rental," Cr Brown said.

First round funding winner the Housing Trust used the $4.3 million to build a block of flats in Dudley Street, Wollongong.

While Head Start Homes didn't build houses, Cr Brown said it showed there were a range of options when it came to tackling the affordable housing problem.

"Affordable housing is such a complex issue [with issues of] supply, personal finances, developers land banking land rather than releasing, build-to-rent," he said.

"It's a hugely complicated problem. If there was an easy solution somebody would have already done it. Every level of government is trying to do the best at this stage. We all recognise a problem, it's just one of those cross-sectional issues where there really is no simple solution."

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