The three criteria to qualify for a Habitat home are (1) need for affordable housing, (2) ability to repay a Habitat mortgage and (3) willingness to partner with Habitat.

Need for affordable housing is defined by a family income that is below the government-set Low Income Cut-Off (poverty line) for their particular region, and existing living conditions that are inadequate in terms of structure, cost, safety or size.

Ability to repay a Habitat mortgage requires that the family has a stable income sufficient to cover the monthly mortgage payments and other expenses that come with home ownership.

Homeowners must demonstrate a willingness to partner with Habitat by contributing 500 hours of volunteer labor ("sweat equity") towards the building of their home.

Through volunteer labour, efficient management and tax-deductible donations of money and materials, Habitat builds simple, decent houses with the help of the homeowner. Habitat houses follow standardized design criteria that maintain the "simple and decent" archetype.

Most Habitat projects are single dwellings or semi-detached homes, but Habitat for Humanity Canada is expanding its build projects to include restoration and refurbishments, condominiums and town home style projects.

Over time, a family's equity in their home increases. Habitat families also often see an improvement in their financial situation since the percentage of their income being spent on housing remains at 30%. In most cases, prior to purchasing a Habitat home, these families are spending between 40 to 80% of their income on rent.

A safe, healthy living environment contributes to the positive growth and development of children. Habitat has recorded many examples of children within Habitat families completing a post-secondary education and establishing successful careers.

Communities benefit when former renters become homeowners who contribute to the tax base. Habitat build projects also offer an opportunity for community members from all walks of life to come together and work side by side in a meaningful way.

As the poverty cycle is broken and a family’s financial situation improves, their dependence on local social services is decreased. In addition, pride of ownership leads to a renewed sense of confidence, and along with their stable, long-term housing arrangement, they become long-term contributors to the community and the local economy.

Habitat builds homes with volunteer labour and as much donated or cost-reduced material as possible. Fundraising takes place to help offset expenses of materials, services and land when they are not available through donations. Financial support is received from individuals, corporations, service groups and the faith community.

Mortgage payments from current homeowners are retained by the affiliate to fund future projects.

The selling price is computed by determining costs in two separate areas: (a) construction and (b) site acquisitions and development. Construction costs include the cost of purchased building material, the value of donated building material, contracted labour costs (or value if donated) and administration costs (at a maximum of $3000 per house).

It is important to note that donations will vary from house to house. A major objective is to keep selling costs equitable for all families receiving comparable houses, regardless of the amount of donations for any given house.

The rule for determining the cost of site acquisition and development should be affordability to the low-income family, rather than market value. Canada Customs and Revenue Agency requires that a reasonable value for land costs be included in Habitat mortgages. The key to dealing with this issue is for affiliates to consistently apply the same method to all of their houses, so that each family is treated the same.

Habitat houses are sold to families, not given to them free of charge. In addition, families help to build their own home.

By building homes at low cost and not charging interest on the mortgage, Habitat for Humanity is able to provide an opportunity, or a "hand up", to buy a home for families that would not otherwise qualify for a conventional mortgage.

The homeowners’ monthly mortgage payments go into a fund that is used to build more homes. The more homes that exist, the more cash flow there is available for further building. This "revolving fund for humanity" fuels exponential growth in the number of houses that are built over time.

The income of all Habitat homeowners is reviewed on an annual basis. If income increases, monthly mortgage payments are adjusted to remain at 30% of their monthly income. If income decreases, usually due to a temporary situation such as a job loss, similar adjustments may be made to maintain affordability during this period of decreased cash flow.

Habitat for Humanity is committed to educating and supporting partner families toward successful homeownership. In Canada, this commitment has resulted in a mortgage default rate of less than 1%.

The Habitat mortgage is designed to keep monthly payments low, encourage long-term commitment and prevent short-term profit. This is done by way of a second mortgage. The first mortgage reflects the actual cost of the house, which is usually far less than it’s fair market value. The second mortgage reflects the difference between the actual cost and the fair market value. Upon full payment of the first mortgage, the second mortgage is forgiven. The value of the second mortgage also decreases gradually with time, usually beginning at the 12 year mark.

If a family were to sell their house in the early years of their mortgage (within the first 12 years) the outstanding second mortgage would then be payable.

Habitat for Humanity has the right to purchase the property if the homeowner wants to sell.

Habitat makes every effort to work with the homeowner families to avoid foreclosure through financial counseling, renegotiated mortgages, etc. Strategies such as payment plans and deeds in lieu of foreclosure are implemented when possible.

While foreclosure is the last resort, sometimes it cannot be avoided. Ignoring homeowners’ delinquencies can be unfair to other homeowners.