Freddie Mac has long allowed borrowers to cover a portion of their down payments with sweat equity. Now, beginning January 2019, Freddie Mac will allow borrowers to cover their entire down payments with sweat equity.

“The Home Possible Sweat Equity Offering supports renovations of aging homes and provides borrowers with an additional form of down payment instead of cash, particularly in rural areas,” said a spokesperson for Freddie Mac. “Borrowers can use sweat equity with no limits on the amount that can be applied to down payments, provided that the labor performed is completed in a skillful manner to support the appraised value (of the home) and is certified by an appraiser.”

According to Freddie Mac, this sweat equity program has multiple benefits:

  • It supports and promotes the renovation needs of aging homes.
  • It provides an additional source for down payments.
  • It allows homeowners “who work with their hands to make a down payment with construction skills instead of with cash.”

Freddie Mac is partnering with the Federation of Appalachian Housing Enterprises, the Hope Enterprise Corporation, the Homeownership Education Resources Organization, Enterprise Community Partners, the Community Development Corporation of Brownsville and the Next Steps and Next Job Programs.

Targeted populations for the sweat equity for down payments program include people living in Middle Appalachia, the Lower Mississippi Delta, Colinas and Native Americans in Indian reservation areas.

Mike Dawson, vice president of Single Family Affordable Lending Strategy and Policy for Freddie Mac, said, “More than 61M Americans live, work and raise families in rural areas and historically underserved communities. In rural America, many credit worthy families with low-to-moderate incomes face significant barriers to homeownership, especially obtaining money for a down payment. This offering will help them use their construction skills to make up that difference, increasing the pool of mortgage-ready consumers.”