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What Is Sweat Equity And Why Does Habitat For Humanity Require It?

If you apply for Habitat for Humanity housing, you’ll be hearing the words “sweat equity” a lot. Here’s what it means and why the program requires it.

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Habitat for Humanity helps low-income families secure modern, efficient, and affordable housing. Contrary to popular belief, this housing is not free. Instead, new Habitat homeowners are expected to make monthly mortgage payments and contribute “sweat equity.”

What Is Sweat Equity?

As its name suggests, sweat equity basically means hard work contributed towards a project. In this case, the project is a home from Habitat for Humanity.

Thanks to the sweat equity you put into constructing the home along with other Habitat volunteers and professionals, you can go from a bunch of materials to a house that’s worth several times more.

Why Is Sweat Equity Required?

As mentioned, most recipients of Habitat for Humanity housing are low-income families. They don’t have a ton of cash to put towards a down payment on a home.

What they do have, however, is the ability to help build the home through their own labor and other contributions that are not monetary.

Since Habitat for Humanity doesn’t give away homes for free and makes them extremely affordable with low payments and deposits, it uses sweat equity to give those families more purchasing power. It’s not necessarily a form of payment, but more of a way to contribute and provide a feeling of community, which is what the program is all about.

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What Forms of Sweat Equity Are Accepted?

Habitat for Humanity knows that not everyone can provide physical labor, especially when constructing a home. To address this issue, they offer many forms of sweat equity that are acceptable.

Sure, you can do construction work or clean up a building site, but you can also perform administrative duties or work in a Habitat ReStore as well.

If you have children, they can contribute towards your sweat equity too. It won’t be via labor, but I can be through their schoolwork. For example, at one Habitat in Florida, a child’s A grade can equal one hour of sweat equity.

Habitat not only provides affordable housing, but they also help you manage your money and home via classes on things like insurance, mortgages, credit repair, safety, and maintenance.

These classes make up part of your sweat equity, but they shouldn’t be seen as work. Since they can help build a solid financial foundation for your future, they should be seen as a highly valuable education you’re getting for free.

These classes start even before you purchase your home, which gives you a better understanding of the process. Depending on your local Habitat, classes could last well over a year.

Why Sweat Equity Is Important

The importance of sweat equity goes beyond the fact that it’s a requirement to own a Habitat house. Instead, it’s essential because it emphasizes such character traits as stability, strength, and independence.

By having a new home and the education to go with it, you can become more independent. Studies have shown this to be accurate, as many families have been able to end government assistance once they purchased their Habitat homes.

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