Sweat Equity

What is “Sweat Equity”?


Sweat equity is a term Habitat uses when talking about the participation of future homeowners in the processes of house construction and homeownership. Sweat equity is about doing the physical work — the hard work — to bring an idea to life. That work becomes an investment in the project and defined as equity. It can be an investment as real as money or land. According to Investopedia, an online financial resource, sweat equity is specifically mentioned and tied to Habitat’s program: 

“Sweat equity is the ownership interest, or increase in value, that is created as a direct result of hard work by the owner(s). It is the preferred mode of building equity for cash-strapped entrepreneurs in their start-up ventures, since they may be unable to contribute much financial capital to their enterprise.”

At Habitat, sweat equity is a future homeowner who chooses to invest in their home as well as the homes of other future homeowners in their build group through physical work to help build their homes. Sweat equity is not a form of payment, but an opportunity to work alongside volunteers who give their time to bring to life a family’s dream of owning a home.

Sweat equity can take many forms for future homeowners working with Habitat. It can mean construction work on their home and on a home for another owner/builder, cleaning up the build site, assisting in administrative duties, planning and participating in events, volunteering at the ReStore and countless other ways of helping out.

Future homeowners invest their time in the long-term success of their homeownership. Throughout the process of purchasing their home, Habitat partner families undergo training that allows them to earn sweat equity as they learn about their mortgage, insurance, maintenance, safety and more. 1st time Homeowner and Homebuyer classes are required for future homeowners to take and also count towards their sweat equity hours.

The main idea behind sweat equity is that families work side by side with volunteers to build their homes hearkens back to even before Habitat for Humanity began in 1976. Clarence Jordan— the founder of Koinonia Farm, where Habitat for Humanity originally began, wrote in a 1968 letter, “What the poor need is not charity but capital, not case workers but co-workers.” That co-worker approach has informed Habitat’s emphasis on how sweat equity works because it means that all of us work together so that future homeowners can achieve the strength, stability and independence they need to build a better life for themselves and for their families.