Do you live in Illinois? If so, you may be eligible for $7,500 in down payment assistance from the IHDA. The Illinois Housing Development Authority offers a program called the Access Deferred Mortgage. As the name suggests, the money you borrow is deferred. In other words, you don’t need to pay it back right away. Just how soon do you have to pay it back? We help you discover the answers below.
What is the IHDA Down Payment Assistance Program?
Access Deferred is a 30-year mortgage program. However, it also allows for the assistance of up to $7,500 in down payment money. You can use this money as an actual down payment or towards your closing costs. As the borrower, you can only contribute a small amount. Right now that means $1,000 unless 1% of the purchase price is higher. This means if the home’s price is more than $100,000, you will pay 1% of the purchase price.
How Does the Down Payment Assistance Work?
You are eligible to receive up to $7,500 or 5% of the purchase price of the home in down payment assistance. The maximum amount allowed is $7,500. The money comes as a loan; however, that loan is interest-free and deferred. In fact, you don’t have to pay it back for the entire term of your 30-year loan. The only time you will have to pay it back is if you sell your home or refinance your mortgage. At that point, it would become due and payable.
What Type of Mortgage Will you Have?
You have the option to choose between any of the available mortgage programs, including:
- Fannie Mae
You can choose among the mortgage programs that suit your qualifications the most.
Qualifying for the IHDA Program
So how do you qualify for the IHDA Access Deferred Mortgage? You’ll need to meet the following requirements:
- You must live in Illinois
- You must have the money to put down the required contribution (1% or $1,000)
- Not make more than the income limits for your county
- Have adequate credit to qualify for the program
- The home must be your principal residence
- You must attend homeowner counseling
Any homebuyer can apply for this program, both first time and subsequent homeowners as long as you meet the income limitations for your area.
Should You Use the Program?
How do you decide if this program is right for you? Start with your plans. Will you stay in the home for the long-term? If not, how long will you be there? If you only plan to live in the home for a few years, you might not make out on the deal. Remember, you will owe $7,500 or whatever down payment you borrowed when you sell the home. You’ll need enough time for the home to appreciate and/or you to pay down the principal to have that money in the home. Otherwise, you could end up paying the down payment out of pocket when you sell the home.
The same is true if you refinance often. Let’s say you take a higher interest rate loan right now because you have bad credit. You know you’ll be able to improve things and plan to refinance in the future. Keep the fact that you have to pay the down payment assistance back if you refinance in mind. It might not make sense to refinance early on in the process or you risk having to pay money out of pocket.
The IHDA down payment assistance program is a great way to get into a home if you otherwise would not have money to put down. Think about all of your options and make sure this is the right choice based on your plans. If it is, it’s a great, affordable way to get the money you need to buy a home.