Self-Help Housing

A Cooperative Model

From the early American pioneers who approached home building on the frontier with a collective spirit, to the California farmworkers of the 1960’s who took the initiative to improve their own living conditions, self-help housing has proven to be a cost-effective, alternative housing strategy and an important influence on housing development in rural communities.

Self-help housing programs allow families to build each other’s homes in a joint, community-based effort. In this mutual self-help model participants build “sweat equity” through their own labor. Successful self-help housing programs reduce the costs of construction and operation, encourage meaningful involvement on the part of the housing recipients, and provide valuable skills training for participants.

USDA: Federal Support Programs

To help serve these ends, the U.S. Department of Agriculture’s Section 502 program offers loans that convert from construction to permanent financing and an interest subsidy for eligible low-income families. In this leveraging program, the Department's Rural Housing Service partners with other lenders in the public and private sector to provide mortgage financing for qualified projects.


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Self-Help Housing

A Variety of Strategies

Self-help housing strategies vary widely from project to project, making it difficult to critique a single "best-fit" program model. Most successful programs rely on a variety of financial resources, a professional construction team, and most importantly, committed participants.

Within this general model, construction professionals are hired to supervise and manage self-help housing projects through all phases of construction. These professionals work with a team of program participants who are part of the collaborative work effort. The size of the collaborative should determine the number of construction professionals needed.

Due to rising material costs, sweat-equity is paying an increasingly smaller fraction of the total development cost. The inability of some projects to significantly reduce the total cost of construction has prompted some criticism of this program, but in collaboration with other partners, the self-help model still stands out as an affordable option.

Suggestions for a Successful Self-Help Housing Initiative

  • Choose building sites carefully to help minimize costs.
  • Find a construction supervisor who will keep up the momentum of the project.

Advantages of Self-Help Housing:

  • Families build equity into their houses through their own labor.
  • Construction and operating costs are reduced.
  • With no single model for mutual self-help housing, projects can tailor the idea to fit individual circumstances and needs.
  • Participants gain a unique sense of ownership by being a part of the building process.

Potential Challenges:

  • Securing affordable building sites.
  • Spending time and money on recruitment and marketing for the project.
  • Balancing families’ labor requirements (usually 30 to 40 hours per week) with normal work and personal schedules.
  • Training unskilled workers.
  • Some lenders choose not to treat “sweat equity” as true equity, which may result in a completed housing unit being undervalued.

Minnesota Case Studies

Three Rivers Community Action, Inc., in Zumbrota, Minn., experimented with a self-help housing program in collaboration with USDA-Rural Development. The program goals were to create homes with $5000 to $15,000 in equity serving people living in Goodhue, Wabasha, and Rice counties.

A Construction Supervisor managed the work site, providing on the job training for program participants. A Self-Help Program Coordinator helped guide participants through the process. To be eligible for the program, participants had to have a "reasonable credit record," a stable income of two years, and be income qualified. Builders/Homeowners were also required to complete a homebuyer education course and contribute 30 hours of work per week to the project. The program did not require a down payment, but participants were asked to contribute $1,000 to $1,500 for closing costs.

The Region 5, Cass, Wadena, Crow Wing, Todd and Morrison counties self-help housing initiative is a developing program that is eligible for federal funding from the USDA's Rural resource grant program. The Region 5 program has set modest, but important goals: Create 12 homes, not to exceed $139,000 per unit, over the next two years.

A lead carpenter will be hired to oversee and coordinate the construction effort for the Region 5 initiative. To qualify, participants must be income-qualified and have a very good credit record. Participants are expected to contribute 65 percent of the labor, which is essential to ensure that the levels of affordability are retained while also helping to cover their downpayment.

Working from a standard selection of home designs, participants will be able to customize the specifications of their home prior to breaking ground. The easy-to-build home plans help to reduce the costs of construction, while helping to ensure the satisfaction and sense of achievement for the homebuilders and owners.

For more information on this program contact William Higgs, Housing Coordinator of The Region 5 Development Commission.

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