Mutual Self-Help Housing Program - used primarily to help very low- and low- income households construct their own homes. The program is targeted to families who are unable to buy clean, safe housing through conventional methods. Families participating in a mutual self-help project perform approximately 65 percent of the construction labor on each other's homes under qualified supervision. The savings from the reduction in labor costs allows otherwise ineligible families to own their homes. If families cannot meet their mortgage payments during the construction phase, the funds for these payments can be included in the loan.

Terms: Loans are for up to 33 years (38 for those with incomes below 60 percent of the area median and who cannot afford 33-year terms). The promissory note interest rate is set by RHS (in July 1997 it was 7.25 percent). However, the interest rate is not usually meaningful since payment assistance can reduce the interest rate to as low as 1 percent. The amount of subsidy is determined by family income as a percentage of AMI, so that the family pays from 22 to 26 percent of their income for principal, interest, taxes, and insurance (PITI) up to an amount not exceeding the promissory note rate. There is no required down payment. RHS must also determine repayment feasibility using ratios of repayment (gross) income to PITI and to total family debt.

Standards: Under the Mutual Self-Help Housing program, housing must be modest in size, design, and cost. Modest housing is defined as housing costing less than the HUD dollar cap, which as of 1997 was $81,548 with adjustments for high cost areas. Houses constructed must meet the voluntary national model building code adopted by the state and RHS thermal and site standards.