Sister Tesa Fitzgerald, in her office, has provided affordable housing for 74 former inmates--so far. Allison Pasek/The Wall Street Journal

Venita Pinckney walked through the door of a spacious three-bedroom apartment in Long Island City, Queens, and promptly sat down on the couch--on the verge of tears.

"Is this really my new house?" she asked Sister Tesa Fitzgerald, a diminutive but sturdy Catholic nun known around the neighborhood as Sister T.

The nun nodded, then added: "You deserve it."

This new building on 12th Street is the rare affordable housing development exclusively for women who have done time in the New York state correctional system. It is the fourth started by Sister Fitzgerald and her nonprofit organization Hour Children, and the first built from the ground up, at a cost of $9.4 million. So far, the group has provided homes for 74 families.

Hour Children helps mothers who have been to prison rebuild their lives and keep their children, many of whom end up in foster care or living with relatives—even after their mothers are released.

Ms. Pinckney, 42 years old, spent a year and a half in Bedford Hills Correctional Facility for a drug crime before walking out in 2010. Her son, Savion, a 5-year-old with a broad smile and a penchant for Legos, was born in the prison nursery. Today, she is a housing coordinator for Hour Children.

"If we didn't build these, they would be stuck in the shelter system," Sister Fitzgerald explained.

Venita Pinckney's 16-year-old daughter, Janaye, and godson, Darjay Williams, get a visit from Sister Fitzgerald. Allison Pasek/The Wall Street Journal

The rent averages about $500 an apartment and will never rise above a third of the leaseholder's income, Sister Fitzgerald said. Last year, the median asking rent in Long Island City was $2,802, according to data from StreetEasy, a real-estate website.

The rules for tenants are simple: Pay the rent on time, respect the neighbors and keep the apartments clean.

Living close to one another gives the former inmates a sense of community. They cook for one another. They do each other's hair. They look after each other's kids.

Each apartment came with a pair of fuzzy slippers for each family member; on the weekends, the women can hear the soft shuffle of their neighbors moving between floors.

"They've all worked hard to rebuild a life outside of prison," Sister Fitzgerald said. "They deserved to live somewhere nice."

The work to bring about this apartment building began four years ago.

First, Sister Fitzgerald bought the site—a Trinitarian convent had once been there—from the Roman Catholic Diocese of Brooklyn for $610,000.

Then, she raised $9.4 million through what she calls "grant soup." The funds came from a collection of state and city agencies, including the New York City Department of Housing Preservation and Development, the New York State Homeless Housing and Assistance program and Enterprise Tax credits.

Finally, construction started on the building. The architectural firm Edelman Sultan Knox Wood designed the building, which has 18 apartments; they are all two- and three-bedrooms. Connie Steinberg handled the interiors.

The photos are of the first group of children that the nun helped in 1986. Allison Pasek/The Wall Street Journal

Sister Fitzgerald wanted the apartments to be beautiful, places where the families felt like they belonged—and where they could stay for however long they wanted to change their lives.

A sense of structure and permanence is important to many of the women, who had been living on the streets before their incarceration.

"We wanted it to feel like a home," Sister Fitzgerald said.

Ms. Steinberg, an Hour Children volunteer as well as an interior designer, managed to furnish and decorate each apartment for about $6,000.

On a single shopping trip, Ms. Steinberg hit about a half-dozen Home Goods stores across western Massachusetts and upstate New York.

"The managers knew me," she said. "They would call me when they got things in."

Both the bill for the interiors and the decorating pleased Sister Fitzgerald.

"That was less than the quote I got from the folks who outfit the shelters," she said. "They make things look like an institution. Connie tailored each apartment to each woman."

Ms. Pinckney shyly told Ms. Steinberg that she had always wanted to live in an apartment decorated in all black and white. The interior designer delivered—a home done in black and white.

"I never thought I would live somewhere so beautiful. My life was sure chaotic before I met Sister Tesa," Ms. Pinckney said as she cooked grits and bacon one Saturday morning.

"When you out there on the street," she said, "you don't think someone like Sister Tesa could love a total stranger. I'm glad she loves me."

Getting her new apartment helped Ms. Pinckney regain custody of her 16-year-old daughter, Janaye. "I got her back because I'm clean," she said, "and I have this apartment."