We are handy and want to buy a house using sweat equity for a down payment.  Will lenders go for this?

From time-to-time, you hear about lenders that allow the use of sweat equity as a credit toward a down payment, but not all of it.  Most lenders, however, are not thrilled with this concept.  The problem is valuing labor.  If a professional paints a house there is work completed to a given standard (that helps maintain the value of the home, and the lender's security if the loan is defaulted) and there is a bill for labor and expenses (paint, caulk, etc.). 

With sweat equity, there can be a cost for supplies, but how is labor valued?  At the same rate as for a professional?  A discount?  And what about workmanship?

The best approach is to speak with as many lenders as possible to see if they have a program that allows the use of sweat equity.  Ask about the maximum sweat equity contribution allowed, total cash needed to close, rates, points, etc. 

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Thanks,

Aaron