Self Help Housing

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Loans for Self-Help Housing

The self-help process enables low-income participants to build their own homes, usually working together in groups on their neighbors' houses at the same time. Homebuyers use their own "sweat equity" to reduce the cost of their homes. When a SHOP borrower meets its production goals and other requirements, up to 80 percent of its loan is forgiven. Then the organization can use those funds for additional SHOP-eligible purposes. Some groups have provided further subsidies to the same homebuyers, while others have established their own revolving loan funds or used the money for future self-help developments.

HAC received its first Self-Help Homeownership Opportunity Program (SHOP) grant in 1996 when the United States Department of Housing and Urban Development (HUD) first began the program. Since then HAC has received eight additional SHOP awards for a total of $68.3 million to support the production of over 6,000 self-help units across the country.

During fiscal year 2006, HUD awarded HAC nearly $6 million in new SHOP funds. From this funding and revolved funds from earlier SHOP awards, HAC committed funds to 41 local nonprofits in 25 states to produce 741 homes.

SHOP 09 Application period is now closed! Click here to access forms for your 09 application.

SELF-HELP HOUSING

The Housing Assistance Council (HAC), a nonprofit corporation, has been helping local organizations, including self-help housing sponsors, build affordable homes in rural America since 1971. Headquartered in Washington, DC, with offices in Georgia, New Mexico, California and Missouri, HAC's mission is to improve housing conditions for the rural poor, with an emphasis on the poorest of the poor in the most rural places. Since its inception, HAC's loan funds have been a centerpiece of its rural housing mission. HAC's capacity to serve self-help housing organizations dramatically increased in 1996 when HAC was awarded $13.5 million in the first HUD Self-Help Homeownership Opportunity Program (SHOP) funding round. Since then HAC has received eight additional SHOP awards for a total of $68.3 million to support the production of over 6,000 self-help units across the country. Self-help housing production typically involves low-income families performing a substantial amount of the construction labor on each other’s homes, under qualified supervision. The labor cost savings make homeownership possible for families who would otherwise be financially unable to purchase homes.

ELIGIBLE BORROWERS . Eligible applicants for SHOP funds include public and private nonprofit self-help organizations.

ELIGIBLE PROJECTS . SHOP loans must be for affordable housing projects, in which the eligible homebuyer contributes a significant amount of sweat equity on the construction of their own home, minimum of 100 hours. SHOP eligible projects may be located in urban and rural areas.

ELIGIBLE USES. SHOP funds are to be used exclusively for land acquisition and infrastructure improvements associated with self-help housing for low-income households, as defined by HUD (below 80% of the area-wide median income). SHOP funds may not be used for actual unit construction or rehabilitation of existing units. Reimbursement or refinance of acquisition costs incurred prior to March 8, 2006 is not a SHOP FY 2006 eligible cost.

TERMS

  • The average SHOP loan per unit may not exceed $15,000.
  • Interest free loan due and payable to HAC when the developed lot is sold to an eligible self-help housing participant or by the due date of the loan, whichever occurs first. A 1% HAC loan service fee is included in the loan amount and is due upon loan closing.
  • HAC may institute a maximum cap on SHOP FY 2007 loan amounts.
  • Two-year loan term for borrowers constructing four or fewer units. Three-year loan term for borrowers constructing five or more units.
  • Take-out or permanent financing must be committed.
  • SHOP loan must be fully secured. LTV no greater than 100%.
  • Eighty percent (80%) of each SHOP loan may be forgiven, at HAC’s sole discretion, when funds have been used to produce the required number of affordable self-help housing units by the deadline and other loan agreement conditions have been satisfied. These grant conversion funds may be passed on as grants or loans to self-help families, or may be used by a borrower to capitalize an internal revolving development loan fund.
  • Completion of a HUD Environmental Review, per 24 CFR 58, is required prior to disbursement of SHOP funds.
  • Applicants may expend funds for which they expect SHOP reimbursement to acquire sites prior to receipt of a HUD environmental review approval. However, the borrower accepts all risk in the event that an environmental problem is uncovered after acquisition.
  • Applicants may not incur infrastructure improvement costs for which they expect SHOP reimbursement before receipt of HUD environmental review approval.
  • Properties acquired and or developed with FY 2007 SHOP funding must comply with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.
  • Quarterly reporting required.

APPLICATION PROCESS. SHOP 09 Application period is now closed! Applications for SHOP funding are reviewed on a competitive basis. If you are interested in applying for HAC SHOP funds the Loan Fund Program at (202) 842-8600 for information regarding application criteria and to request an application packet. All potential SHOP applicants are pre-screened to ensure eligibility.

FOR MORE INFORMATION. For further information about SHOP funds and the HAC FY 2006 SHOP Program, please contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it , Loan Officer, at (202) 842-8600 ext. 154.

For more information about other HAC loan products, click here.

Updated: August 5, 2009