Unlocking Opportunities
Last month we shared information about what “affordable housing” means, the state of affordable housing in Jackson, MI, and how Habitat helps. In this article we’ll dive a little deeper and share details about Habitat’s Homebuyer Program.
What is Habitat for Humanity’s Homebuyer Program?
Habitat for Humanity’s Homebuyer Program provides opportunities for people in low to moderate income households to purchase their first home. A common misperception is that Habitat gives these homes away for free. This couldn’t be further from the truth. A Habitat homeowner has put in hours, weeks, months, and even sometimes years of hard work to be able to qualify for a Habitat house. And then they purchase that house with an affordable mortgage.
Not All Habitat Affiliates are the Same
Habitat for Humanity International (HFHI), located in Atlanta, GA, is Habitat’s “home office” and provides program guidelines for local Habitat affiliates, like the one here in Jackson. HFHI also provides required regulations and support to keep all Habitat affiliates’ lender and construction activities in compliance with local, state, and federal laws and codes.
That being said, local Habitat affiliates have a certain amount of autonomy to customize their programs to meet the unique needs of the communities they serve. An affiliate in a service area the size of Jackson County, for example, will likely manage its homebuyer program differently than an affiliate serving an area the size of Kent County (Grand Rapids).
Large affiliates like the one in Kent County may have to create defined open application periods, for example, because otherwise they would be inundated with more applications than they would have capacity to process. Where medium sized affiliates like the one here in Jackson County can often continually accept applications year-round. And small affiliates like you might find in the UP of Michigan may only build one house a year, so they may accept applications only when they’re ready to build that one house.
3 Qualifications for Habitat’s Homebuyer Program
The above is just one example of how various Habitat affiliates across the country can differ in the way they set up their program. But the “meat and bones” of the program are all the same and require three main qualifications:
Need
Ability to pay
Willingness to partner
The rest of this article will explain these three qualifications in more detail.
Habitat Homebuyer Qualification #1: Need
“Need” as a qualifier for Jackson’s Habitat Homebuyer program is defined as a person or household whose household income falls between 40% and 80% Area Median Income (AMI) as defined by the US Department of Housing and Urban Development (HUD).
We use these income limits as qualifiers so that we can ensure we’re setting the prospective new homebuyer up for success as a homeowner. A homeowner will need to be able to pay an affordable mortgage payment (more on this next), and also be able to budget for and afford maintenance and upkeep on a house.
Habitat Homebuyer Qualification #2: Ability to Pay
“Ability to Pay” is basically what it sounds like. A Habitat homeowner will be required to show the ability to pay a mortgage payment, including property taxes and homeowner’s insurance, just like any other homeowner. In addition, a Habitat homeowner will need to be able to afford to maintain and care for their home for all the years they own it.
During the process of becoming a Habitat homeowner, an applicant will go through education and counseling related to finances, credit, budgeting, home maintenance, and much more.
There are significant differences between owning a home and renting. Some people who were born into poverty have never experienced homeownership for generations, so they may not have had opportunities to learn what it means to get a mortgage, for example, or how to maintain a house.
This is where the “willingness to partner” qualification comes in.
Habitat Homebuyer Qualification #3: Willingness to Partner
In order to qualify to purchase a Habitat home, an applicant must be willing to participate in educational opportunities. These include:
Credit counseling and repair
Budgeting
How to prepare to apply for a mortgage
Home maintenance classes
Hands-on home maintenance and repair experiences
Work alongside Habitat volunteers to build their house
All of the hours put into the above activities count toward Habitat’s required “sweat equity” hours.
Jackson Habitat requires a single adult household Habitat homebuyer to complete a minimum of 300 sweat equity hours. And households with more than one adult are required to complete a minimum of 500 sweat equity hours.
Other activities that can be used toward the required sweat equity hours can include things like volunteering in the ReStore, working as a volunteer on other Habitat projects, helping in the administrative office, and working as a volunteer in other areas of the community.
Habitat’s Focus: Providing Opportunities for Homeownership
Habitat’s philosophy is “a hand up, not a hand out”. Habitat is not a charity. We do not give anyone anything. We simply provide opportunities for stability in housing through homeownership to people who are willing to work hard for it.
Habitat’s programs are built around the knowledge that it sometimes takes a “hand up” to break the cycle of poverty and step into homeownership for what could be the first time in a family’s history. It would be irresponsible to provide a home for someone without also ensuring they have the means and education to be able to be successful in maintaining the home. This is why Habitat provides opportunity - not free houses.
“Give a man a fish, he eats for a day. Teach him how to fish, he eats for a lifetime.” — Lao Tzo
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