Excerpts from
http://online.wsj.com/article/0,,SB1..._mark etplace


(Unfortunately, the article makes no mention of where to get info on
the USDA program. Looks like you'll find that here -
http://www.rurdev.usda.gov/rhs/sfh/b...lfhelpsite.htm)


A little-known federal program finances homes in rural areas for
low-income families. Sweat equity accounts for 10-15% of the value of
each new home, and serves as the down payment.

Each participating family contributes at least 40 hours of labor
weekly over 10 to 12 months until all houses in their group are
completed. The developer employs a building supervisor who trains the
families and assigns them construction jobs. All told, the families do
about two-thirds of the labor.

To qualify, a family's annual income can be no more than 80% of the
area's median income. The interest rate on their home loans ranges
from 1% up to the going market rate, depending on family income.

"This isn't a giveaway," says Russell Davis, administrator of housing
for USDA rural development. "These families make mortgage payments and
pay taxes." The default rate hovers around 2-3%.

Mr. Davis says the USDA wants to expand the program in some
underserved areas. But soaring land prices are becoming an obstacle in
states like California and Nevada. Local groups compete with
for-profit developers for land. And in some towns, new homeowners must
contend with property taxes that run nearly as high as mortgage
payments.

Families are meticulous about maintaining their homes and rarely sell
them. If a family sells its home, it is required to repay the interest
credit received from the USDA, which is the difference between a
ceiling interest rate set by the agency and the actual interest the
family paid.