Not all credit or lender programs allow you to use Sweat Equity to buy a home, and many that require the participation of a nonprofit to manage sweat equity hours. Each program has slightly different rules, but in general, the concept of sweat is to improve the housing stock by building new affordable homes or renovating existing homes in difficulty with the help of the people who will live there. Freddie Mac recently introduced Sweat Equity into its down payment options for its Home Possible credit program. Habitat uses the term “sweat equity” to refer to the hours our owners spend building their homes and their neighbors` homes, as well as the time they spend on their own self-improvement. For example, in the case of a one-unit property financed by a HomeReady loan, a 5% deposit is required, of which 2% may come from sweat equity. Habitat for Humanity may be one of the most well-known sweat equity programs, but others include the USDA`s direct loan program, Fannie Maes HomeReady, and Freddie Macs Home Possible mortgage. These credit programs are designed primarily for low-income households. Sweat Equity reduces the amount of paid work required for a home, which in turn helps reduce costs. In addition, the time they spend building their own homes gives a sense of pride and ownership and gives the essential building and maintenance capabilities necessary for residential property. Gardner said the Freddie Mac Sweat Equity program is modeled on the success of the USDA relief and mutuage program, also known as the Section 523 program. This program provides grants to nonprofits, to help them oversee groups of low-income families to work on each other`s homes, according to Bruce Lammers, administrator of the USDA Rural Housing Service in Washington, D.C. Fannie Mae allows Sweat Equity to be an acceptable source of financing for its HomeReady mortgages if the lender can prove that the mortgage is part of the HomeReady program and that the program Credit managed by a strong and experienced nonprofit organization, according to Fannie Maes lender guide….