How does Habitat for Humanity work?

Our model and approach to end poverty housing

Interested in finding out how Habitat works? We’re present at community level in over 70 countries, through local people who play an active part in solving their own housing problems with our assistance.

In essence, Habitat for Humanity works by providing safe and decent homes to vulnerable families:

  • Thanks to affordable, interest-free loans (as well as micro-loans in developing countries)
  • All the money from repayments is then used to build more homes
  • The involvement of the family itself in the building of their future home (“sweat equity“)
  • Creating jobs by always hiring local workers and then recruiting volunteers to help build faster


Funds to finance home construction come from:

  • ReStore: hundreds of charity shops across the US and many other countries repurposing donated materials and creating local jobs
  • Public and corporate donations

As a charity, our main activities consist in:

  • Builds affordable homes and renovating existing ones whenever we can (or when the costs of building are too high)
  • Building disaster-resistant homes using local techniques and material to allow local populations to keep building on their own
  • Building toilets and provides access to safe water
  • Responding to natural disasters, focusing on long term recovery
  • Providing micro-loans to help families set up small businesses

how habitat for humanity works

What Habitat for Humanity provides

To go deeper into how Habitat for Humanity really works and where it provides value on the ground, it’s key to understand these benefits that relate to our expertise and professionalism:

  • Framework for good governance, which all projects must respect – for example regular auditing, adequate build quality standards, monitoring and evaluation, homeowner selection processes
  • Funding: fair, affordable and sustainable
  • Training in project and finance management, good governance, construction and maintenance, and health education
  • Access to a worldwide network of housing expertise
  • International volunteers (at the invitation of the local community).

What local communities provide

  • Local leadership and project management
  • Local volunteers
  • Assistance in selecting future home partners (i.e. the families we will support)

The key principles of how we work are

‘Sweat equity’

Those who will live in our homes (our ‘homepartners’) must put in up to 500 hours of their own time, helping to build or renovate their own home and others in the community. This reduces the costs, increases their sense of ownership and self-esteem, and also builds community.


Habitat for Humanity’s homepartners invest their own resources, at an affordable level, in the project in which they participate. This could be a non-profit mortgage or a micro loan.

The homepartners’ monthly mortgage payments go into a revolving fund and are used to build still more Habitat for Humanity houses. The only exception to this is disaster reconstruction schemes, where costs are not repaid by homepartners if they have lost their livelihoods and therefore do not have the means to pay.

Voluntary labour

Using voluntary labour drives the cost of building a new home down. The average cost of a Habitat for Humanity home in the developing world is just £3,000. But we don’t just facilitate the building of new homes. Many people living in poverty opt for renovating or extending the home that they have, as this is more affordable for them.

Homepartner selection

Families in need of decent, affordable housing apply for homeownership with their local Habitat for Humanity.

Each local Habitat’s family selection committee selects homeowners based on three criteria:

  • The applicant’s level of need.
  • Their willingness to partner with Habitat.
  • Their ability to repay a mortgage through an affordable payment plan.
  • Habitat’s homebuyers invest hundreds of hours of their own labour, called sweat equity, working alongside volunteers and other Habitat homeowners, in addition to paying an affordable mortgage and receiving financial education.

Habitat for Humanity follows a nondiscriminatory policy of family selection. Neither race nor religion is a factor in choosing Habitat’s homeowners.

Repayments and financial management

Each homepartner family signs a sale and purchase agreement for the cost of their house or building project. The sale is paid for with a Habitat for Humanity mortgage, or a loan from a partner microfinance organisation, which is the amount the homepartner is required to repay.

Repayments go into a ‘revolving fund’ which is then used to seed fund further home builds or renovations in the community.

Habitat for Humanity’s interest in the house is protected by a legal charge, which progressively transfers the equity of the home to the family – starting at year five of the mortgage. Habitat for Humanity’s commitment to gift the equity sum may be suspended or cancelled completely if there are serious breaches of the homepartner’s obligations under the mortgage.

However, if repayments have been missed due to extenuating circumstances, such as the death of the main income earner, we may choose to suspend the requirement for repayments. Each case is judged on its own merits by the local community.