SHOP Application Reference Material

Application Materials

The following links are provided to assist you in completing a 2021 Self-Help Homeownership Opportunity Program (SHOP) application. These links provide additional information on program and eligibility requirements.

  1. FY 2021 SHOP NOFO
  2. Eligibility Requirements for Applicaitons of HUD’s Grant Programs
  3. General Administrative Requirements and Terms for HUD’s Financial Assistance Awards
  4. Federal Register Notice

Loan Products

Rural Seed Money Loan Products

The Housing Assistance Council (HAC) operates several loan funds that provide vital seed money to rural housing developers: community-based, nonprofit organizations, housing development corporations, self help housing sponsors, farm worker organizations, cooperatives, Indian tribes, public agencies, units of local government, public utility districts, and small business and minority contractors. HAC funds help these organizations and individuals take the steps necessary to improve housing and living standards for rural, low- and very-low-income households, such as creation of subdivisions and new single- or multifamily housing units, rehabilitation of existing units, and improved water and waste water disposal systems in rural communities.

The Housing Assistance Council’s loan fund provides low-cost financing to developers of affordable housing in rural communities nationwide. Funds are currently available at 5.0% interest with a discounted 1.0% service fee; borrowers are responsible for closing costs. Current interest rate for for-profit developers is 8%. The standard loan term is three years. There is no maximum loan amount, although loans may not exceed available collateral. Loans must be recoverable from the permanent financing for the project.

Loans must be for projects, which include provisions for serving low-income people as defined by federal guidelines. Projects serving low- and very-low income persons will receive priority. At least 51% of the resulting housing units must be affordable to low- or very-low income people. The proposed projects must be located in areas that are rural in character and have populations of less than 25,000. Each of HAC’s loan products is briefly described below.

PRE-DEVELOPMENT

Loan funds are available for predevelopment expenses associated with the development of affordable housing. Eligible uses are: land options, down payments, architectural and engineering fees, site surveys, soil test borings, market studies, appraisals, environmental engineering studies, archeological clearances, and legal expenses related to site acquisition.

SITE ACQUISITION

Loan funds are available for acquisition and related costs for the development of affordable housing. Eligible uses are: land options, escrow payments, land purchase, legal expenses associated with site acquisition, and other reasonable closing costs.

SITE DEVELOPMENT

HAC loan funds may finance site development expenses associated with affordable single-family and multifamily development including self-help housing. Eligible expenses are: impact and permit fees, engineering surveys/fees, clearing and grading, wells, septic/water, sewer installation, utility hook-ups, streets, curbs, sidewalks, and legal expenses for site development.

CONSTRUCTION

Loan funds may finance unit construction costs of affordable housing developments. Eligible expenses are: construction materials and labor, construction bonds, construction inspection fees, legal costs, and title and recording fees. The maximum loan amount for construction loans is currently $750,000 and limited to single-family development. All fees incurred by HAC, including legal costs, hiring of a local construction inspector, title, and recording fees, will be charged to the borrower and, if necessary, financed by the HAC loan. The term of the loan will be determined by the needs of the project, pending underwriting review.

HAC’s SELF-HELP HOMEOWNERSHIP OPPORTUNITY PROGRAM (SHOP)

HAC provides loan funds through the HUD Self-Help Homeownership Opportunity Program (SHOP) to self-help housing providers for land acquisition and infrastructure improvement for the development of self-help units. The homebuyer family must contribute a significant amount of sweat-equity towards the construction of the dwelling. Loan funds are made available through a competitive application process and cannot exceed $15,000 per lot. SHOP loans are at 0% interest. Up to 90% of the SHOP loan may be forgiven when the borrower has satisfied the conditions of the loan agreement. The forgivable portion may become a grant for the group to establish its own revolving loan fund for future site acquisition and development of self-help housing or to provide direct subsidies to participating homebuyer families. SHOP funds are subject to HUD Environmental Review regulations.

PRESERVATION LOAN

PRLF proceeds are for short- or long-term costs of preservation, repayment and rehabilitation of USDA RHS Section 515 properties. Loans may be used for refinancing and costs incorporated into long-term financing such as options; downpayments; purchase; site development; architectural and engineering fees; construction financing; working capital and construction bonds; costs associated with USDA RHS required Capital Needs Assessments; preliminary easement and water rights purchase; legal expenses to establish utility districts; bonding; interim financing of local share costs; acquisition of existing private systems for rehabilitation; and emergency repair; and rehabilitation and repair.


If you are interested in applying for HAC loan funds, please contact HAC at (202) 842-8600, for information regarding application criteria and to request an application packet.

Applications should be submitted to HAC’s National Office at 1025 Vermont Avenue, N.W., Suite 606, Washington, D. C. 20005, Attention: Loan Fund Division. Telephone (202) 842-8600. Information about HAC and state and federal loan programs may be obtained from the same address or from the HAC Regional Offices.

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HAC-Funded Projects

HAC Profile: Lee County C.D.C., Arkansas

MARIANA/RUNDO SUBDIVISION

SHOP 2001 – $80,000

Raising twelve children in their three-bedroom mobile home, Clarence and Willa May Taylor had to park another trailer in the back yard for extra space. Taylor says he thought he was doing well when he bought that place, but the past year has been “the best ever” because his family is now living in a new home.

The Taylors are retired and receive limited disability assistance. They could afford a new house because of the work of the Lee County Community Development Corporation (LCCDC), which used funding from the Housing Assistance Council (HAC) and other

sources as well as technical assistance from HAC. A loan from HAC’s Self-Help Homeownership Opportunity Program (SHOP) enabled Lee County CDC to prepare the sites in the Taylors’ small subdivision. Additional financing and “sweat equity” labor from the Taylor family brought the mortgage to an affordable level.

“This is the best thing the CDC could do for the community,” says Clarence Taylor, gesturing to the neat yards and well-kept homes around his. “This is really a wonderful place to live.”

The Taylors sold their old mobile home to a neighbor who intends to rent it to someone else. Perhaps the new tenants will be able to follow the Taylors’ path to better housing.

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HAC Profile: Community Action Commission of Fayette County, Ohio

Village Green Subdivision

SHOP – 1996, $300,000
RHLF – $60,000 Phases I & II
SHOP 1998, $200,000
RHLF – $155,000 Phase III

Julie Allen and her children Tess and Travis moved from a homeless shelter to an apartment to a home of their own, thanks to the Community Action Commission of Fayette County, (CACFC) and the Housing Assistance Council. In 1996, when Julie was pregnant, she left a domestic violence situation and became homeless. She moved into a homeless shelter run by the CACFC and then into supportive housing, which provided services and assistance as well as an apartment for the family.

Julie’s next step was to enroll in the CACFC’s self-help housing program. A loan from HAC helped the CACFC to buy and prepare the land for the 75-unit subdivision in

Bloomingburg, Ohio where Julie’s house was to be built. She and several of her neighbors worked together to help build each other’s houses. Their “sweat equity” replaced their down payments, helping them to afford to purchase their homes. Julie says she really values the safety and community spirit that homeownership has provided. Her children are thriving in the neighborhood, and she has an excellent job. In December 2002, she was a featured speaker before 800 people at the opening session of HAC’s National Rural Housing Conference, describing how self-help housing had changed her life.

HAC Profile: Northeast C.A.C.

SHOP ’99 – $181,818

Glenn Lawrence is proudly helping to build a house for his family in Moberly, Mo. Funding from the Housing Assistance Council (HAC) and the Rural Development arm of the U.S. Department of Agriculture are enabling the Northeast Community Action Corporation (NECAC) to develop this house and 17 others. The homes are built using the “self-help” method. Because of their labor contribution, Glenn’s family’s house will cost about $79,000 to build but will be appraised at over $100,000. The family will obtain a mortgage from USDA, with payments scaled to fit their income. Northeast Community Action oversees the development process. A loan from the Housing Assistance Council’s Self-Help Homeownership Opportunity Program covers predevelopment costs such as architectural fees and lot preparation.

Glenn’s mother, stepfather, and younger brother and sister will live in the modestly sized four-bedroom, two-bathroom house, which will be far more comfortable than the house they are now

renting. The rental “isn’t too bad,” says Glenn, but then admits the roof leaks so seriously that one room is unusable. Since he lives on his own, Glenn will not move here with them, but he is glad to use his construction skills on their behalf. A graduate of NECAC’s youth training program, he hopes to make a career in construction.

Learning about the self-help program was a side benefit of Glenn’s participation in the training program. He suggested to his mom, Patsy Hayden that she should apply, since she has always wanted her own house. Glenn is delighted to be helping her make that dream reality — just in time for her fiftieth birthday.

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Lending

Certified as a Community Development Financial Institution (CDFI) by the U.S. Treasury Department, the Housing Assistance Council has offered low-cost rural housing development loans for over 40 years.

HAC makes short-term loans at below market interest rates to local nonprofits, for profits and government entities developing affordable housing for low-income, rural residents. HAC’s loans enable borrowers to acquire land, pay architectural and environmental fees and cover other costs that arise before construction loans are available. HAC balances careful underwriting and meaningful collateral with flexibility and an understanding that a rural community’s best potential housing developer may begin without significant housing development experience. HAC loan funds serve various purposes:

Loans from these funds are used for a wide variety of housing development purposes, for all types of affordable and mixed income housing projects, and for both rental and ownership units.

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AERIS Rated

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