FAQ: IHDA Home Start $8,000 Federal Tax Credit for First-Time Homebuyers

When must Home Start loans close by?

These must close on or before November 30th.  There are no guarantees that the tax credit will be extended on a federal level nor are there any guarantees that IHDA would continue the program if the federal tax credit is extended.

What is the minimum down payment?

The combined Loan-to-Value can be 100%.  The borrower must be able to document 1% of their own funds to qualify.

What loan(s) make up the Home Start program?

The first mortgage is an FHA 30 Year Fixed rate.  The second mortgage provides up to $6,000 as a second mortgage.

Are there income or purchase price limits with this program?

There are two links from IHDA that might help:

• Income Limits
• Purchase Price Limits

Are there any limitations on property types?

This applies to existing 1-unit, single family homes, HUD approved condominiums, and townhomes.  Ineligible property types include NO new construction and no condominiums that have pending litigation.

Where else can I learn more?

The IHDA website

How does the Home Start program compare to other options?

The mortgage rate is going to be higher than the normal Chicago mortgage loan FHA interest rate.  Right now, the spread is about .5%. That’s a pretty big spread.  Here’s how I’m looking at this:

• For someone with access to a 3.5% gift from a family member, that is a better option that Home Start:  You avoid the strings and hoops of the Home Start program and get a better mortgage interest rate.  Buying now at low rates and low home prices seems like a good play if it is affordable.
• For someone without access to a 3.5% gift or down payment, this is a significantly better option than doing nothing.  Let’s presume that it would take you 6 months to save up the full down payment.  Mortgage rates would likely be .5% higher anyway and home prices are on the rise.

Home Start allows people to act now.  With countless stocks that have jumped 800-900% (mortgage insurers, Fannie Mae, Freddie Mac, etc.), we’re seeing some investment in housing-related stocks.  I don’t know when the housing market hit its low, but I know that the day that CNN reports that housing is recovered will be too late to buy a home at these current levels of affordability.