HAC’s Self-Help Homeownership Opportunity Program (SHOP) provides loans to organizations for affordable housing projects. The self-help process enables low-income participants to build their own homes, usually working together in groups on their neighbors’ houses at the same time. Under qualified supervision, homebuyers perform a substantial amount of the construction labor, using their own “sweat equity” to reduce the cost of their homes.

When a SHOP borrower organization meets its production goals and other requirements, up to 90 percent of its loan is forgiven. Then the organization can use those funds for additional SHOP-eligible purposes. Some groups have provided further subsidies to the same homebuyers, while others have established their own revolving loan funds or used the money for future self-help developments.

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ELIGIBLE BORROWERS. Eligible applicants for SHOP funds include public and private nonprofit self-help organizations.

ELIGIBLE PROJECTS. SHOP loans must be for affordable housing projects, in which the eligible homebuyer contributes a significant amount of sweat equity – a minimum of 100 hours – on the construction of their own home. SHOP eligible projects may be located in urban and rural areas.

ELIGIBLE USES. SHOP funds are to be used exclusively for land acquisition and infrastructure improvements associated with self-help housing for low-income households, as defined by HUD (below 80% of the area-wide median income). SHOP funds may not be used for actual unit construction or rehabilitation of existing units.

TERMS

• The average SHOP loan per unit may not exceed $15,000.
• Interest free loan due and payable to HAC when the developed lot is sold to an eligible self-help housing participant or by the due date of the loan, whichever occurs first.
• HAC may institute a maximum cap on SHOP loan amounts.
• Two-year loan term for borrowers constructing four or fewer units. Three-year loan term for borrowers constructing five or more units.
• Take-out or permanent financing must be committed.
• SHOP loan must be fully secured. LTV no greater than 100%.
• Ninety percent (90%) of each SHOP loan may be forgiven, at HAC’s sole discretion, when funds have been used to produce the required number of affordable self-help housing units by the deadline and other loan agreement conditions have been satisfied. These grant conversion funds may be passed on as grants or loans to self-help families, or may be used by a borrower to capitalize an internal revolving development loan fund.
• Completion of a HUD Environmental Review, per 24 CFR 58, is required prior to disbursement of SHOP funds.
• Applicants may expend funds for which they expect SHOP reimbursement to acquire sites prior to receipt of a HUD environmental review approval. However, the borrower accepts all risk in the event that an environmental problem is uncovered after acquisition.
• Applicants may not incur infrastructure improvement costs for which they expect SHOP reimbursement before receipt of HUD environmental review approval.
• Properties acquired and or developed with SHOP funding must comply with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.
• Quarterly reporting required.

APPLICATION PROCESS. Applications for SHOP funding are reviewed on a competitive basis. If you are interested in applying for HAC SHOP funds contact the HAC Loan Fund at 202-842-8600 for information regarding application criteria and to request an application packet. All potential SHOP applicants are pre-screened to ensure eligibility.

FOR MORE INFORMATION. For further information about HAC’s SHOP funds, please contact the HAC Loan Fund at 202-842-8600.

For more information about other HAC loan products, click here.

Updated: March 19, 2012