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Frequently Asked Questions
Who does Habitat select as partner families?
Habitat Selects families living in substandard or overcrowded housing
and whose income is listed between 25 and 50 percent of area median income.
This places the focus on families who would have very little chance of
becoming homeowners without Habitat. For example, the minimum annual income
to qualify for a family of four from Louisa is about $12,475.00. Habitat
families are selected based on need for housing, ability to pay the mortgage
and willingness to partner with Habitat for build homes.
What does Habitat require of families?
The families help build their own homes and those of other Habitat families.
They are required to contribute at least 200 hours of “sweat equity.”
This is time spent helping build houses or volunteering for Habitat
in other ways. Many families catch “Habititis” and continue
volunteering long after they have finished their required hours and
moved into their own homes.
Partner families also pay the $55,000 to $60,000 cost of building materials
and land through an interest free mortgage held by Habitat for Humanity.
The houses are built almost entirely by volunteers, saving each partner
family approximately $40,000 in labor costs. Mortgage terms vary from
15 to 30 years, depending on the family’s ability to pay. Most
families carry a 25-year mortgage and pay around $275 per month in principal
payments, real estate taxes, and property insurance.
What if the family sells the house?
A typical Habitat for Humanity house might be appraised for $100,000.
If the first mortgage were $55,000, then Habitat would hold a second
mortgage equal to the $45,000 value of the volunteer labor. A portion
of that second mortgage would be forgiven for every year that the family
lived in the house and made the payments on the first mortgage.
For example, if a Habitat homeowner with a 20-year mortgage obtained
a better job in another city and had to sell the Habitat house after
living in it only one year, that family would have to pay off the balance
of the first mortgage, as well as nineteen-twentieths of the second
mortgage. On the other hand, if the family lived in the house more than
20 years, they would never have to pay a penny on the second mortgage
and would own all the equity as soon as the first mortgage was paid
off.
Habitat retains a right of first refusal to purchase each home in case
a family needs to move and Habitat wants the house to sell to another
selected family.
How does Habitat use the income from mortgage payments?
Partner families mortgage payments are received into Habitat’s
“Fund for Humanity,” which is used to build still more Habitat
homes. Through this revolving loan fund, donations to Habitat are constantly
recycled into new homes for generations to come. A donation to Habitat
is a perpetual investment in decent, affordable housing for qualified
partner families.
Do partner families succeed as homeowners?
Most take great pride in their homes and are careful to stay current
in their payments. Of the more than 150,000 Habitat houses built around
the world so far, less than 1.25% have resulted in foreclosures. Lynchburg
Habitat has built more than 200 homes in 13 years and only one family
was not able to keep the home. Greater Charlottesville Habitat has refinanced
one family with employment problems, lengthening their mortgage 15 to
20 years, but has never had a foreclosure.
The families’ success as homeowners can be measured in many ways.
One can see it in the good care they take of their homes. Children’s
grades and personal expectations for their own lives often improve when
they move from substandard, crowded or high crime situations into a
simple, decent affordable home. Partner families gain not only equity,
but also personal confidence and satisfaction from helping to build
a house and then becoming proud homeowners.
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