I’m a big fan of Habitat for Humanity.

In my view, they are the only genuine affordable housing program which provides the benefit of zero-interest mortgage, mortgage payments that never exceed 25% of a low-income household’s income and builds hope and improves well-being of those families most in need. The Habitat model is remarkable as it combines the benefits of 500 hours of sweat-equity of the low-income families, volunteer labor, building materials, financial donations donations, and government affordable housing grant money into a interest-free home equity mortgage for the households most in need because of their low-income conditions (i.e. poverty). No interest is charged on the mortgage saving a low-income household thousands of dollars over time and making more disposable income available to them. The economic benefit to these families is that effectively enjoy the equivalent of a living wage thus solving one the key poverty issues: the lack of sufficient disposable income to live a good life. Habitat has figured out a way to architect a mortgage, cover its operating costs and forgo a profit providing not only low-income households but all of society with a measurable economic well-being benefit.

This week (July 9-14, 2017) former President Jimmy Carter and his wife Rosalynn Carter are here in Edmonton to help build 75 new homes in Edmonton, Fort Saskatchewan and Fort McMurray for low-income families in the space of one-short week. This is part of the Carter Build project that will see 150 new affordable homes built in Alberta and Winnipeg in celebration of Canada’s 150th anniversary.

I’ve had the honour of examining the ‘economics of well-being’ impacts of Habitat’s remarkable business model that provides low-income families with a zero-interest mortgage, building genuine home equity as well as a quantifiable increase in hope and overall well-being. Most of these families would not otherwise qualify for a typical home mortgage in Edmonton since their income is too low. These families are often forced into rental housing situations, many in subsidized affordable rental housing supported by governments. But we all know that paying rent is not like building real equity in your home; the rent cheques go to landlords. At the same time paying interest on a mortgage (which is French word meaning ‘death pledge’) benefits the banks but ultimately detracts from the disposable income of low-income households who need this money for healthy food and other life needs.

The remarkable thing about the Habitat home equity model is that the mortgage is based on a family paying no more than 25% of their pre-tax household income. The conventional measure of affordable housing and poverty is when a family or individual is paying more than 30% of their income on housing. Remarkably roughly 1/4 of Canadian households (13.1 million) are currently spending more than 30% of their income on housing, thus would qualify for affordable housing programs like Habitat. In Alberta, an estimated 280,000 households would qualify for affordable housing programs.
Another remarkable features of a Habitat for Humanity home equity mortgage is that 100% of the mortgage payments are refunded to the family once they choose to move out of the Habitat home. That means that the family is able to take all of the equity they have built in the Habitat home and apply it to the purchase of a new home. Moreover, many of these families choose to move out and beyond their Habitat home as their economic conditions and income have improved. An increase in economic hope and well-being is another key benefit of the Habitat model.

The benefit of eliminating the burden of interest costs from housing is significant. If you were to calculate the costs of interest on a conventional 25-year mortgage in Edmonton you will find that even at unprecedented low rates the cost of interest is significant over time. Habitat for Humanity has fashioned a mortgage that eliminates the burden of interest costs which low-income households are inequitably encumbered by.

I’ve calculated that eliminating the cost of interest on a Habitat for Humanity mortgage is nearly the equivalent of providing an Edmonton low-income household with a living wage (a living wage is about $17.00 per hour per worker in Edmonton).

There are also significant societal economic benefits from Habitat’s model. Poverty costs the Alberta economy between $7-9 billion per year in costs such as health care, government services, policing, and agencies like United Way an others who exists because of the conditions of low-income and other poor life conditions. I’ve calculated that the Habitat model for affordable housing increases the mental, physical, emotional and even spiritual well-being of Habitat partner families thus reducing a significant portion of the societal costs of poverty. This thus positively impacts Alberta’s fiscal bottom line.

Indeed, Habitat might just be one of the most effective ways of eliminating poverty by lowering the actual costs of housing, increasing disposable income and improving the well-being and hope of families most in need. Habitat may be less of a housing program than it is a program of economic and financial justice and goodwill.

I encourage you all to support Habitat for Humanity as a volunteer or through financial donations to a program that was ispired by its founder Millard Fuller and his friends President Jimmy Carter and Rosalynn. Fuller, who founded Habitat for Humanity International first in Zaire, Africa and then returned home to establish Habitat in the US, believed that economic justice was possible and helped conceive of the Habitat zero-interest home equity model.

Fuller once said:

“The mark of a truly great society is one that takes care of the least.”


  • Radu Seserman says:

    What Habitat for Humanity does is extraordinary. Indeed, aside from the financial help there are many additional benefits, to the owners and to the communities where these houses are build in, that are hard to quantify. It is well said Habitat for Humanity is more than a housing program, it it an economic justice program. I wish they were building more houses.
    Do you have any details about their operations, their financial information? I would like to understand what is holding them from expanding more. Also, it is interested to know if there is a program for the houses they build or rehab to keep them affordable when the first owners decide to sell.

    • Dear Radu, I have analyzed the Edmonton Habitat for Humanity model in great detail. The Edmonton H4H is the largest builder of all others in Canada. They could, in principle build about 150+ homes a year with their pre-fab facility capacity. What limits Habitat from building that many units every year are primarily financing and gifts of land (virtually every property Habitat secures is gifted by a municipality) and labour and materials. Habitat must rely on Government affordable housing grant money to support roughly $90,000 per home in cash. Government grants are not always available. Habitat also relies on financial donations from various benefactors. Habitat rarely sells their homes into the market maintaining homes in their inventory for the next low income household to take occupancy. An average tenure of a Habitat Partner Family is about 5 years. When the family moves out (usually when their income has reached a threshold of about $60,000+) they are encouraged to move out as they can now afford their own home with a normal mortgage. The home is restored ready for the next family. It is a remarkable model of home equity since the Partner family’s mortgage is zero-interest and based on about 20% of pre-tax income. When the family decides to move out they receive 100% of their mortgage payments made during their tenure which amounts to receiving their equity in the Habitat home. Title to the home as an asset is retained by Habitat for Humanity. The typical Habitat family will avoid over $9000 per year in typical mortgage interest charges on a normal average market-rate Edmonton duplex home. This gives a low income household considerable disposable income or what I have calculated is the equivalent of earning a sufficient living wage.

      • Ivelisse says:

        I would like a chance to get housing first then that idea is correct but when you rent to the hire income what do you do next …

  • Radu Seserman says:

    Dear Mark,
    Thank for your detailed reply. Indeed, H4H program is a real help for those who get in one of their house. I am glad to learn H4H is the owner of the properties they build and they preserve them as affordable housing. The limitations you list are significant. They limit quite a bit the impact H4H has on the affordable housing crisis.
    I was wondering what changes to this model would help it scale faster.

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