Habitat for Humanity: Another Path to Affordable Homeownership

If traditional home prices feel out of reach, Habitat for Humanity may offer another path to homeownership. But there is an important misconception to clear up first.

Habitat does not give people free houses.

People accepted into Habitat's homeownership program purchase their homes and make mortgage payments. The program is designed to make homeownership more affordable for households that may have difficulty purchasing through the traditional housing market.

Who Can Qualify?

Habitat programs are managed locally, so requirements can vary from one community to another. In general, applicants are evaluated based on three major factors:

• Need for affordable housing - your current housing may be unaffordable, overcrowded, unsafe, or otherwise inadequate.
• Ability to pay - you must demonstrate that you can afford the mortgage and other costs that come with owning a home.
• Willingness to partner - Habitat homeowners actively participate in the program before purchasing their homes.

Income requirements are often based on Area Median Income, or AMI. This compares your household income with incomes in the area where you live. Because income limits vary by location and household size, your local Habitat organization determines whether your household meets its requirements.

What Is Sweat Equity?

Habitat homeowners contribute time to the program before purchasing their home. This is called sweat equity. It may include helping build or rehabilitate a Habitat home, completing homebuyer education, volunteering, or participating in other approved activities.

Sweat equity can require a significant time commitment over several months. The number of hours and what activities count, depend on your local Habitat program. Some affiliates may also allow family members or other supporters to contribute a portion of the required hours.

You do not need construction experience to participate.

Financial Education Required

Habitat also requires future homeowners to complete financial education.

Depending on the local program, you may learn about:

• Budgeting and saving
• Understanding your mortgage
• Homeowners insurance
• Home maintenance
• Managing the ongoing costs of owning a home

The goal is not simply to help you purchase a house. It is to help you prepare for the financial responsibilities that come after you receive the keys.

Do You Still Have a Mortgage?

Yes, Habitat homeowners purchase their homes and make monthly mortgage payments. What makes the program different is its focus on affordability. Habitat generally works to keep the monthly mortgage payment affordable based on the homeowner's income, commonly targeting no more than about 30% of gross monthly income.

The exact mortgage terms depend on the local Habitat organization and financing available.

You may also be responsible for some upfront costs or buyer contributions. Ask your local Habitat organization how much money you will need during the program and at closing.

How Do You Apply in Georgia?

Start with the Habitat organization serving the area where you live or want to purchase. Habitat programs operate locally, and Georgia has organizations serving communities throughout the state.

Your local Habitat organization can tell you:

• Whether applications are open
• Current income requirements
• What homes are available
• How much sweat equity is required
• What financial education you must complete
• What documents you need to apply
• What costs you will be responsible for

Do not assume you earn too much, earn too little, or would not qualify before checking your local program's requirements.

Why This Matters

Traditional homeownership is not the only path to owning a home. Habitat for Humanity provides another option for eligible households who can afford homeownership but may struggle to purchase through the traditional market.

You must qualify. You must participate. And, you will have a mortgage and the responsibilities that comes with owning a home. For the right household, Habitat may provide a path to homeownership they did not know was available.

Sources: Habitat for Humanity