How Habitat Homeownership Works: Habitat offers a hand up, not a hand out. Habitat builds homes and sells them to qualified families at no-profit.
Habitat Homeownership Qualifications
- Residency – live or work in Buncombe County for at least 12 months
- Need – currently living in inadequate housing (i.e. overcrowded, unsafe, unaffordable, unsanitary)
- Willingness to Partner with Habitat – attend classes, complete sweat equity, volunteer with sponsor, etc.
- Ability to Pay – have and maintain good credit and have adequate income to cover mortgage payment
Protecting our Investment
Because Habitat homes are sold at-cost and not at market value, some people wonder if Habitat homeowners can re-sell their homes on the public market and make a profit. To protect our investment and to protect our homeowners from predatory lending, Habitat adds a “silent” second mortgage to the home which lasts for the duration of the primary mortgage – 30 years, or 360 months. This second mortgage is only in place for the purpose of protecting the homeowner and Habitat’s investment (and not for Habitat to make a profit). With each payment of the primary mortgage, Habitat forgives 1/360th of the second mortgage, allowing the homeowner to earn equity in the home.
This means that when a Habitat homeowner pays off his or her mortgage after 30 years, the silent second mortgage is completely forgiven and the homeowner owns the home free and clear. The silent second mortgage only becomes due and payable if a homeowner decides to sell the home before the first mortgage is satisfied. At that point, the homeowner could sell the home but would owe (to Habitat) the remaining balance on both the primary and secondary mortgages.
Funding for Habitat
Habitat homeowners repay their affordable mortgage to Habitat over 30 years. Habitat uses this money, along with proceeds from our ReStore, donations, home sponsorships, and grants, to build and repair houses for families in need. Last year alone, Habitat mortgage payments contributed more than $786,000 to our building programs.