Sweat equity offers some a path to homeownership

RurAL CAP identifies and works to alleviate the root causes of poverty here in Alaska
Published: Oct. 26, 2023 at 2:27 PM AKDT
Email This Link
Share on Pinterest
Share on LinkedIn

ANCHORAGE, Alaska (KTUU) - For many Americans, owning a home is becoming increasingly out of reach.

As inflation rises, the cost of purchasing a home also increases — but so do mortgage interest rates, which can make getting approved for a mortgage challenging.

On the Kenai Peninsula, there is hope for some Alaskans with dreams of owning a home — they just have to be willing to put a little sweat into it.

“I have built a home through the RurAL CAP program, and ever since after my build, I had friends and I helped them,” Rhonda Johnson said. “And I helped volunteer and I put thousands of hours in. I can’t even put ... I do not know. But I’ve put a lot.”

Johnson is a construction assistant and a homeowner through the RurAL CAP program, and the recipient of the 2021 National Community Action Program Volunteer of the Year award. Johnson has helped build over 40 homes and was able to turn her love for volunteering into a job after RurAL CAP — a nonprofit organization that provides housing, Energy and Environment, Health, early childhood education, weatherization, and elder and youth engagement services — saw her dedication to helping others.

“There’s a light at the end of the tunnel,” Johnson said. “I know how much it meant to me when I was able to move into my home that I have built with my hands.”

According to Mishell French, RurAL CAP’s director of Rural Housing, the organization identifies and works to alleviate the root causes of poverty in Alaska.

“There’s a major shortage of affordable housing stock. It’s been well-documented in communities across Alaska, and within the Kenai Peninsula, which is where we’re currently administering a self-help program,” French said.

In partnership with USDA Rural Development, RurAL CAP assisted several low‐income, rural families and individuals to achieve home ownership. However, under the Mutual Self‐Help Housing Program, qualifying families and individuals jointly contribute home‐building labor under the guidance of a skilled construction supervisor. The labor provided by each family is known as “sweat equity,” and that equity later becomes their down payment.

It breaks down like this: the non-monetary contribution of time, labor, and effort to build each community member’s home essentially becomes their down payment.

The down payment, calculated by taking the actual appraised value of the home once it’s finished, is then subtracted from all the debt recorded against the house.

“Right now, our families are seeing about $65,000 in equity when they move into their homes, so it’s about 20% of the value of the home,” French said.

Assistance from the USDA Rural Development’s 502 direct mortgage loan program is available to finance the cost of purchasing a lot, building materials, and subcontractor labor needed to construct the home.

The program results in affordable payments for those who take part.

”We’re seeing an average payment of under $1,000 a month, which includes taxes and insurance,” French said.

Each home varies in design and total square footage based on the plan each family is approved to construct. But Johnson says it is worth all the effort.

“I thought I would never ever be a homeowner,” Johnson said. “I always rented.”

To get more information about RurAL CAP and the self-help program, visit RurAL CAP’s website. There, anyone can find a description of the program and in-depth details on how to qualify.