Nearly half the families in the large cities of developing countries live in squatter settlements. This paper outlines a housing services policy for low-income urban families. It emphasizes the incremental development of their own homes using family initiative, living in their dwellings while completing them, rather than construction of complete dwelling units by the commercial or public sectors. Such a housing services policy would contribute to the objectives of equity and efficiency. It would provide maximum flexibility to low-income families to time their investments and expenditures for housing and other goods and services, as preferred, and as necessitated by families' low and fluctuating monetary resources. Also proposed is a suitable financial mechanism responsive to this policy and to two critical factors: the significant nonmonetary component of low-income economic transactions, and instability of monetary disposable income. (Delivered at International Conference on Housing for the Emerging Nations, Tel Aviv, December 1974.) 23 pp. Ref.