Self-Help Housing Loans

Rural Development makes loans for self-help housing including site development, and grants for technical assistance to help low income families build homes in rural areas.

What is Self-Help Housing?
Individual houses are built under supervision by a group of families who will live in the dwellings. In short, it is a group mutually helping each other with the guidance of a construction expert.

Who May Borrow?
Any small group of low income families may qualify providing they cannot individually afford to build modest houses by customary methods. Each family must be able to repay a loan for the cash cost of the house.

How is a Group Formed?
Find 6 to 10 families in your area interested in self-help housing who cannot afford to obtain a modest house by customary methods. Tell the Rural Development Community Development Manager of your desire to take part in the self-help-housing program. We will tell you what steps to take.

How May Loan Funds Be Used?
Loans are used to buy material, and to pay for any skilled labor and contract costs for work the families are unable to perform. If necessary, loans may be used to buy building sites and to prepare them for construction activity.

What Must Self-Help Members Do?
Members must agree:

• To work as a group under the guidance of a construction supervisor.
• To work the required hours necessary to complete the house.
• To attend all pre-construction meetings.
• To build only modest adequate housing.
• To build their houses in the same community.
• To carry out all responsibilities of homeownership, after housing is completed.

What Will Rural Development Do?
Rural Development will:

• Determine the eligibility of each participating family.
• Advise the participating families of assistance from other Federal or public organizations.
• Conduct pre-construction meeting that will include basic instructions in construction, familiarization with the self-help approach, and discussion of planning, construction, and maintenance of a house.
• Make loans to eligible non-profit organizations to develop home sites to be sold to applicants on a non-profit basis.
• Make technical assistance grants to qualified organizations to pay for technical assistance and a construction supervisor.
• Work with the sponsoring organization and the Agency's Technical and Management Assistance Contractor to develop a successful program.

How Will Planning and Building Be Performed?

• Plans for modest but adequate housing will be selected and specifications developed.
• Construction will involve as much on-site work as practicable.
• Basic plans and construction methods will be standardized as much as possible.
• Materials may be purchased on a group basis.
• The group will decide how members will share labor, how records will be kept of time worked, and how labor will be exchanged on a basis that is fair to all members.
• Depending on skills of participants, the group may decide to do all the construction, or contract for work that cannot be done easily, such as excavating, installation of wiring or plumbing, and dry wall finishing.
• Construction will start only after the loan has been closed.
• Construction of houses will be done in stages. Each stage of construction will be finished, if practical, on all houses before starting the next stage.
• The construction supervisor, with advice of the group's president, will divide the group into teams on the basis of skills, compatibility, and availability.
• Construction changes cannot be made without prior approval of the Rural Development Community Development Manager.
• Families will move into the new homes only after construction of all houses has been completed.

What Agreements are Signed?
Each family will sign a promissory note as evidence of a desire to participate in the self-help housing program and to furnish the required labor to complete the house. A membership agreement, which will outline the operation of the project, also will be signed by each family.

Who May Receive Technical Assistance Grants?
A public body or a public or private nonprofit corporation with the legal, administrative, and technical capacity to provide supervisory assistance to help low-income families build homes in rural areas by the self-help method may qualify. An applicant organization must show that:

• A need clearly exists in the area for self-help housing.
• Personnel can be hired to successfully carry out a technical assistance program.
• Funds are not available from other sources to provide these services.

If the applicant is a nonprofit corporation, it must also have either:

• Successful experience in the field of self-help housing; or,
• A sponsoring organization with this experience or with proven ability in related business fields.

"Helping Families Achieve Their Dreams ... Through Self-Help Housing"
-- a brochure from NCALL Research, Inc.