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What is Sweat Equity?

Sweat equity is a term used often when talking about the creation or building process. It’s about doing the work — the hard work — to bring an idea to life.

That work becomes an investment in the project. It can be an investment as real as money or land.

Sweat equity is the “contribution to a project or enterprise in the form of effort and toil. 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.”

Sweat equity can take many forms for future homeowners partnering with Habitat. Essentially, it’s a new homeowner investing work in their home or one for another family. It’s an opportunity for families to help build their home alongside volunteers and play an active part in making their dream of owning a home a reality.

“Sweat equity is a transformational experience for families and a cornerstone of our homeownership program,” says Sonia Lee, director of homeowner and mortgage services at Habitat for Humanity International. “The skills and knowledge gained through activities like volunteering on a build site or taking financial literacy classes help set new homeowners up for success long-term.”

• Performing construction work on their home or another family’s home. Common activities can include framing or raising walls.
• Clearing debris from build sites to make way for new construction.
• Writing thank you cards to local donors or filing or performing other administrative tasks.
• Helping to make lunches for volunteers on a build site.
• Participating in homeowner classes. Throughout the process of purchasing their home, future homeowners can earn sweat equity credit as they learn about their mortgage, insurance, maintenance, home safety and more.

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