SELF-HELP HOMEOWNERSHIP OPPORTUNITY PROGRAM (SHOP)

HAC's SHOP 2008 application funding round is now closed.

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, 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. Our 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 we have received six additional SHOP awards for a total of $50.8 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 supervisions. The labor cost savings make homeownership possible for families who would otherwise be financially unable to purchase homes.

Program Description

ELIGIBLE BORROWERS. Eligible applicants for SHOP funds include nonprofit organizations, Indian Tribes, housing authorities, units of local government, and other entities eligible for federal funding. Individuals are not eligible for SHOP funds. If you are an individual seeking housing assistance, click here.

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, typically a minimum of 200 hours. For SHOP 2004, homebuyers must contribute a minimum of 100 hours of sweat equity. SHOP eligible projects may be located in urban and rural areas.

Eligible Uses of SHOP Funds

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). Eligible infrastructure costs are: utility hook-ups and connections, including water, electric, gas and sewage lines; wells and waste disposal systems; impact and building fees; streets, streetlights, curbs, roads, and sidewalks; surveys; engineering fees; and site preparation, including grading, razing, de-leading, hazardous waste clean-up and other environmental cleanup costs. SHOP funds may not be used for actual unit construction or rehabilitation of existing units.

Terms:

• For pre-2004 funding rounds, the average SHOP loan per unit could not exceed $10,000. For SHOP 2004, this limit was increased to $15,000. HAC's interest-free loan is 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. There is a two-year loan term for borrowers constructing four or fewer units. For borrowers constructing five or more units, the loan term is three years. Take-out or permanent financing must be identified or committed. The SHOP loan must be fully secured by real property. The LTV must be 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, of up to $12,000 for SHOP 2004 funded units, 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.
• Quarterly reporting is required.

APPLICATION PROCESS.

HAC's 2008 funding round is now open. Applications for SHOP funding are reviewed on a competitive basis. Once HAC receives a complete application (prior to the deadline), loan fund staff verify the eligibility of the project and underwrite its feasibility, scoring the application's merits against other submissions.

FOR MORE INFORMATION.For further information about SHOP funds, please contact Brooke Adams, Loan Program Assistant, at 202-842-8600, ext. 128, or brooke@ruralhome.org.

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This page was updated on May 20, 2008.