HUD-1425-CPD, October 1993
Low-income families often lack adequate capital to make monthly housing payments or to assemble a lump sum to cover downpayment and closing costs on a home.
Sweat equity programs provide an alternative to cash outlays; such programs allow families and individuals to purchase a home in return for their labor.
Sweat equity contributions significantly reduce construction and rehabilitation costs, as well as capital contributions.
Beneficiaries and volunteers in the program receive training in construction and home repair techniques; these techniques not only provide valuable job skills, but also give individuals the capacity to extend the life of their neighborhood's housing stock.
Finally, sweat equity programs can build neighborhood ties and empower communities by assisting individuals in taking responsibility for and gaining control over their environment.
HOME funds can be used as a source of low-cost financing to support sweat equity programs.
The funds may be used to acquire vacant or improved land, cover the cost of onsite infrastructure, pay for materials, services, and construction contractors that cannot be provided through sweat equity itself.
This guide provides necessary information to participating jurisdictions who wish to establish a sweat equity program.
It addresses the selection of properties for development, how HOME and other funding sources can support a sweat equity program, the use of sweat equity in new construction versus rehabilitation, and the enlisting of participants and contractors.
It also provides an appendix with sample forms: HOME Sweat Equity Programs guidelines, the requirements for executing written HOME Agreements, Section 8 Housing Quality Standards, Property Inspection Forms and Sweat Equity Family Log Sheets.
These forms may be used by participating jurisdictions in establishing their own sweat equity programs.