Sweat Equity Programs: Buy a House with Little or No Money Down

Not many people are fully aware of the sweat equity programs available for first time home ownership. Anyone can buy a home with a little basic home construction knowledge and even better, little or no money down!

I could not believe my ears when Sam, a former co-worker, told me how much he put down on his house. “Who got ripped off, you or the seller?” I sarcastically asked him. “Neither”, he replied with a proud smile. I then proceeded to pick his brain for the what, where and how of it all. He began to tell me of the sweat equity program and how he and his wife earned credit by performing a portion of the work involved which was deducted from their down payment. When it was all said and done, Sam wrote a check for only $650 and soon after, he was moving into his first home. “It’s a lot easier than people think it will be”, claims Sam Bachman, a Pergo floor installer in Bend, Oregon, who did a large portion of the “sweat” in his house. Installing his own hardwood floors, hanging his doors and painting reduced his down payment to well under what most people would spend on a house of similar size. “I could have moved in with zero down if it wasn’t for the upgrades”, he added. Sam’s upgrades consisted of extra heating ducts for the upstairs rooms. Sam also claims that some of the minor glitches and problems were worth it because he was able to watch the builders and catch them in the act. For that reason, it pays to know a little about home construction plus the satisfaction of ownership will always be there, for Sam and many others finding out that a little sweat pays off in the long run.

My wife Julie and I were married in May of 1999 and we had already discussed buying a home but knew a big chunk of change would be needed for the down payment. We even gave subtle hints for money as wedding gifts instead of the traditional cascade of silverware and china. We did end up receiving cash that was used to pay off debts that were in the way of our credit. By any means necessary we were determined to be home owners. Luckily, we were able to get financing for an amount of one of the house plans of a local contractor.

After hearing Sam’s story, we became excited, though a bit skeptical, and soon made an appointment with Wood Homes, Incorporated, a building contractor that proudly boasts the majority of their business due to the sweat equity option they offer. One of the first questions we were asked was did we have any previous home building experience. Neither of us has ever built a house before and knew there would be some concern with performing some of the sweat. At the time, we were more excited about the savings than whether or not our doors would be hung properly or the vinyl in the kitchen would look like it was done sloppily. Some of the work was a bit time consuming and with such high anxiety levels over moving in as soon as possible, we ended up changing our minds about doing most of the sweat such as the finish trim. Soon after, we found out that it was O.K. since the credit was only for $400. Even though we couldn’t move in for a few hundred dollars like Sam, we still paid a lot less than we would have by avoiding the conventional route. Besides, it beats renting!

Then there was the time line. In order for the house to be completed within a reasonably tentative time of 90 days, we knew we had our work cut out for us. Luckily, there was always the choice of backing out. We just wanted to move in and the subs just wanted to get paid. If anything, it was a great motivator as well. On the other hand, our neighbor down the street did a lot more sweat than we did, which went beyond 90 days. In fact, they were still working on their house after we closed on ours and they started before us. It all depends on personal desires and the timeline is flexible.

Denise Wood, owner and manager of Wood Homes, Inc. of Bend, Oregon, says that performing work on one’s home, sweat equity, is becoming a trend, yet it is still overlooked and misunderstood by many. Roughly 95 % of the first time home buyers perform some amount of sweat, usually the painting and landscaping. Though only about 20% will do this and just about everything including framing and heating. But that number will most likely increase over time. This is usually done when the home owner is a licensed carpenter or electrician. “Once they perform the labor it is automatically earnest money. It’s definitely the best way for first timers, especially in a generation of want”, adds Wood.

It is also easy to confuse sweat equity with habitat for humanity, which is practically the opposite. Habitat for Humanity is where the sub contractor donated some or all of the labor and materials and is sought as a charity gift. Sweat equity homes are also more expensive and you as the future owner are basically treated as a sub contractor in a sense. Once you’ve performed a little sweat and put a modest down payment towards the cost, in addition to the sweat, the house is yours. According to the Department of Housing and Urban Development (HUD), this is something that has been around a while and is nationwide.

“I am so proud of our buyers”, says Wood who brags about what has become of the little subdivision in Bend, Oregon. “There’s a great feeling of community. It’s like we’re are our own little city.” Holly Mitchell is a single woman whom recently purchased a plan and is doing all of the finish trim herself, with a little help from her son. “Who has that kind of money to put down on a house these days? This is well worth it.”, says Holly.

The concept of home ownership can be a realized dream, with a little sweat. It will be even better when we’re enjoying the finished landscaping and reflect on our accomplishments. Besides, we now have a garage full of souvenir tools and other items that we never thought of having during our renting days. Home SWEAT home!

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