Self-help housing is a way to help families achieve home ownership. With the guidance of Self-Help Enterprises, 8-12 families form an informal partnership to help each other build their houses. Technical construction assistance and training is provided by a superintendent from Self-Help Enterprises.
2. How does a self-help housing program work?
Three elements are necessary to make self-help housing work.
a) Technical assistance from Self-Help Enterprises to assist the participants with loan applications and house construction;
b) Mortgage loan financing; and
c) Families who want to become home owners, and are willing to do most of the work in building their homes.
3. How many families are in a self-help housing building group?
Generally, a mutual self-help housing group is made up of 8-12 families.
4. How many hours of labor does each family contribute to the construction of all the houses in the group?
Each family contributes as much labor as is required to complete all the houses in the group. Generally, about 1,600 hours of labor per family is required, with each family contributing at least 40 hours each week to the building group. "Family hours” include the labor of all owners, any child 16 years of age or older, and 1-3 approved helpers (optional).
5. When are the houses built?
Most of the construction takes place on Tuesday-Saturday between 8:00 a.m. and 5:00 p.m. Since some participants in the self-help housing program must work during the day, some work on the houses can be done in the evenings and on weekends. However, a daily labor force is essential to the timely and cost-effective completion of the houses.
6. How are house plans selected?
Self-Help Enterprises has a variety of house plans available in each project area. The size of the house depends upon the size of the family, what the family can afford, and the size of the building lot.
7. Do all the houses in a self-help group need to be completed before any of the families can move in?
Yes. Self-help housing involves sharing labor to complete a common goal. All of the members of a self-help building group work on all of the homes, and every house will be completed within a few days of each other.
8. Can single parent households participate in a housing program?
Yes. However, there is no reduction in the labor commitment for these families.
9. What is technical assistance?
Technical assistance is the process of organizing and supervising groups of families in the building of their own homes. It is provided by Self-Help Enterprises and includes the following functions:
a) Locating suitable building sites.
b) Recruiting future owners who are interested in sharing labor in the construction of each others' homes.
c) Assisting at meetings of the families at which the self-help program and subjects related to home ownership, such as taxes and insurance, are explained and discussed.
d) Assisting families in selecting house plans which meet their needs and are within their ability to repay.
e) Developing cost estimates for construction materials and any subcontracting that will be required.
f) Providing assistance in the preparation of applications for loans to pay for land fees and construction materials.
g) Supervising and training families in the proper construction of their homes.
10. Who provides technical assistance?
Assistance is provided by the staff of Self-Help Enterprises, a nonprofit corporation that receives grant funds from the United States Department of Agriculture (USDA) and other sources.
11. Do the self-help participants pay for technical assistance?
If the building site is in a USDA-eligible area, this service is provided without charge by Self-Help Enterprises. In non-rural communities, some or all of the cost of technical assistance may be included in the sale price of the house to be paid from mortgage funds.
12. Who provides the loan money for the land, construction materials, fees, and any subcontractors that may be required?
The USDA provides loans for the land, construction materials, and any subcontracting that may be required to self-help owner-builders in rural areas. If another source of mortgage financing is used, Self-Help Enterprises obtains construction financing which the family repays with a home loan after construction is completed.
13. Who can qualify for a self-help housing loan?
Generally, there are four qualifications:
a) Good credit status;
b) Stable income from employment or other sources;
c) Income that does not exceed eligibility guidelines; and
d) Ability and willingness to meet the labor requirement
Each lending program may have different criteria for applicants, so individual projects may have differing eligibility standards.
14. Are there subsidies available?
Yes. The interest rate on a USDA loan can be reduced to as low as one percent (1%) based on the owner-builder’s income. Other subsidy programs from a variety of local, state and federal sources are often available. Self-Help Enterprises arranges for this additional financing and explains the entire funding package to each applicant.
15. How long does it take to build a self-help home?
It largely depends on how efficiently a building group works together. Usually, the construction takes between 9-11 months.
16. Can I just work on my own house?
No. Families enter into a contract with each other to share labor. This labor sharing agreement is a fundamental principle of the program.
17. Can I participate if I have already owned my own home?
In some cases, yes. Most programs make allowances for homebuyers who lost a home due to divorce or currently have a substandard home or if you have not owned a house in the past 3 years.
18. How much cash will I need to participate?
No cash is needed for a down payment, because your labor is the down payment. However, you will be required to pay for a credit report and hand tools, which together will cost around $300. Near the end of construction, there will be certain closing costs, including property taxes and insurance, that are the responsibility of the owner-builder. The specific amount of these costs will be estimated prior to the start of construction, and families must plan to save this money during the construction period.
19. Are families with disabled or handicapped members eligible?
Yes. However, there is no reduction in the labor contribution to the building group for any participant family. In cases where one of the future owners cannot physically do construction work, arrangements for additional work from approved helpers must be made by the participant. There are also house plan modifications available when there are special needs in a household.
20. Can I sell my home after I build it?
Yes. However, you will owe back the money you borrowed, and some loans may require that you share in any gain you earn on the sale with the lender.
For more information, contact Self-Help Enterprises at (559) 651-1000 or click here to e-mail us.