Borrowers can leverage their construction skills to cover down payment and closing costs
Freddie Mac has expanded its Home Possible sweat equity parameters to allow borrowers to leverage their construction skills to cover down payment and closing costs when purchasing a home.
The offering supports the renovation of aging homes and provides borrowers with an additional form of down payment instead of cash, particularly in rural areas. Borrowers can use sweat equity with no limits on the amount that can be applied to the down payment, provided the labor performed is completed in a skillful manner to support the appraised value — and is certified by an appraiser.
In line with the effort, Freddie Mac has collaborated with the Federation of Appalachian Housing Enterprises, Hope Enterprise, Homeownership Education Resources Organization, Enterprise Community Partners, Community Development Corporation of Brownsville, Next Steps, and NextJob.
Through these partnerships, Freddie Mac provides borrowers the education, resources, and training necessary to understand its parameters. Additionally, Freddie Mac is providing technical assistance and training to help increase the organizations’ capacity to offer homebuyer education, housing counseling, employment and re-employment services, and related resources to families in Middle Appalachia, the Lower Mississippi Delta, the Colonias, and Native Americans in Indian reservation areas.
“More than 61 million Americans live, work, and raise families in rural areas and other historically underserved communities,” said Mike Dawson, vice president of single-family affordable lending strategy and policy at Freddie Mac. “In rural America, many creditworthy families with low-to-moderate incomes face significant barriers to homeownership, especially obtaining the down payment. This offering will help them use their own construction skills to make up that difference, increasing the pool of mortgage-ready consumers.”