Habitat houses are a hand-up — not a handout


People often think the houses built by Habitat for Humanity are just given to the homeowners. That couldn’t be further from the truth.

Families typically get a 25-year mortgage with a 0% interest rate. The typical monthly payment is between $500 and $525 a month.

Why so cheap? First, the volunteer labor comes with no costs attached. Second, the Habitat organization follows Biblical scripture that emphasizes a 0% interest rate.

Interestingly, the rate of default with Habitat homes is miniscule compared to what’s generally happening in the marketplace at large. That’s because the homeowners have a vested interest in more ways than one. Families must also do the following:

  • Complete 250 hours of “sweat equity” on other Habitat homes or on their own
  • Attend 12 homeowner education classes and hands-on maintenance seminars
  • Make all monthly payments on time as a renter for 1 year before a formal closing takes place. At that point, all the money paid thus far is applied as mortgage payments.

This is a hand-up program, not a hand-out one. If you pay, you stay…and if you don’t, you go!

Editor’s note: This segment originally aired Jan. 31, 2012.

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