A Federal Reserve study has shown that every ‘$1,000 increase in student loan debt…causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during their late 20s and early 30s.’
As student loans continue to burden recent graduates in the workforce, there is more and more talk of student loan forgiveness. The Illinois Housing Development Authority (IHDA) now offers one opportunity for such forgiveness to new home buyers! DACA recipients are eligible, as well.
SmartBuy works in two ways:
1. Down Payment Assistance: SmartBuy provides $5,000 that can be applied to your down payment and/or closing costs.
2. Student Loan Relief: SmartBuy can pay off your student loans! The assistance is 15% of the purchase price up to $40,000.
Are you eligible for SmartBuy?:
Here are some of the main qualifiers:
1. You must have at least $1,000 in student loans.
2. Your FICO “mid-score” (of the three bureaus, the score that is not the highest or lowest) must be 640 or higher.
3. Your income and purchase price of the property you want to buy must fall within the income and purchase price limits for the county the property is located in.
4. You must be buying a new primary residence to be eligible. The assistance cannot be applied retroactively if you have already bought your home.
What if the 15% doesn’t cover all your student loans?
The rule for this program is that the total student loan debt of at least one of the borrowers’ student loans must be paid off at closing, but if the 15% of the purchase price doesn’t cover it, you can bring additional money to closing to cover the difference.
If the full student debt for both borrowers can be paid off, that is permitted. Either the borrower or co-borrower (not both) can elect to leave their loans unpaid, but if they do utilize any of the 15% assistance, it’s “all-or-nothing”. This means if some of your loans are being paid through SmartBuy assistance then every student loan must be paid off, using the assistance money or in combination with the extra money you bring to closing.
How Can I Apply?
All homebuyers must apply through an approved SmartBuy Lender. If you’re not sure if you are eligible, call or apply online with a SmartBuy Lender today! They will go over the numbers with you to see if you are eligible and how much you qualify for! Click HERE to find eligible lenders.
Source: IHDA Mortgage – SmartBuy Program