PROVO, Utah (ABC4) — Housing programs that help families build their own homes across the state of Utah are facing new challenges as the federal government has lowered loan ceilings for participating families, forcing some of these programs to shut down.
Self-Help Homes is one of nine organizations across Utah that run mutual self-help housing programs. “We group anywhere from eight to 12, 13 families together and they actually build each other’s homes under the direction of one of our construction supervisors,” executive director Brad Bishop told ABC4.com.
In February, the U.S. Department of Agriculture (USDA) lowered the loan ceiling for how much money they can give out through their 502 program, which provides loans to families who participate in mutual self-help housing programs.
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“In Utah County, it’s gone from $481,000 to $360,000. Down in Washington County, it’s gone down to $364,000, which makes the budgets much more tighter to fit a new construction home, even a modest home, to fit within those parameters,” Bishop said.
The families participating in the program put in “sweat equity” for each other, Bishop explained. They build each other’s homes, and that helps lower the costs of building a home. “But now the lower loan limits are making that even more difficult,” Bishop said.
This week, the USDA made it so that programs can bring in other financing, above the loan limit. They also made it so that appraisals for the homes can be higher than the cost of the loan, because the value of homes can be very high in certain areas. Utah is part of a pilot program testing these changes.
Bishop said that the lower loan limit makes it harder to fit the home itself in the budget, so they’re going to have to bring in low interest or no interest loans that will match up with the USDA loan so that low-income families can afford the payments. Those other loans and additional funding will come from the state, as well as counties and cities.
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However, not all mutual self-help housing programs in Utah are so lucky as to have an established relationship with the state that can help them bridge the gap with these lower loan limits. Several of them are having to shut down their programs because they won’t be able to make the new loan limits work for any kind of house.
One organization that is shutting down its mutual self-help program is Neighborhood Nonprofit Housing Corporation (NNHC) in Logan, stating that they were unable to procure any additional home loans, administrative funds, or additional support from USDA. Their program has operated for 26 years and helped almost 750 families build affordable homes.
NNHC is not shutting down completely, as they run other programs like low-income rental housing development, mortgage assistance programs, and home ownership rehab, but the mutual self-help program was their flagship program.
“This program has always been a ‘hand up, not a handout’ and NNHC hopes that Congress will continue to make efforts to restore this program to full functionality so that we can once again bring the benefits and promise of homeownership to families in Utah through this program,” NNHC stated.
This comes as Utah Governor Spencer Cox has made affordable housing a major focus of his administration, with a promise that Utah will construct 35,000 new single-family homes by 2028.
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NNHC said that they have received support from Cox and Utah’s Congressional delegates in trying to demonstrate the negative impact this change will have to the USDA, and Bishop is hopeful that they will continue to be able to work with the USDA and the Trump administration.
“I think they’re doing it in the spirit of trying to make their dollars go further, and trying to force families into lower costing, smaller homes,” Bishop said. But he also pointed out that in Utah, two thirds of the families they serve have five or more people, and a tiny home or a two-bedroom home simply won’t work for them.
“As they start analyzing and seeing that there’s a number of programs that cannot operate especially under these higher market areas where we can’t make these loans fit, so we do hope our congressional leaders will help assist us as well,” Bishop said.
He added that these lower loan limits may be reversed in the future, but in the meantime, Self-Help Homes is grateful that they’re able to partner with other entities to bridge the gap.
As the change went into effect, Bishop said that 38 applications with Self-Help Homes were under consideration, and some were deemed eligible, but now the loans they were set to receive are higher than the cap. He said that a few families were able to close their loans before the change, but at least one was not able to secure the loan in time.
Self-Help Homes has built more than 700 homes in four Utah Counties: Wasatch, Juab, Utah, and Washington Counties, according to Bishop. A total of 2,400 homes across the state have been built through mutual self-help programs.
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