Homeownership can be the key to building wealth, but that can feel like an impossible goal under the weight of student loan debt.
In December, the Illinois Housing Development Authority (IHDA) launched the $25 million SmartBuy program.
The program pays off student loan debt for homebuyers, offering 15 percent of the purchase price of a primary residence up to $40,000.
There are income and purchase price limits, you have to use an approved lender, and the total student loan debt for at least one borrower has to be paid off at closing.
By the end of May, the funding was exhausted.
Kristin Faust is the executive director of IHDA.
“We knew the demand would be strong, but we didn’t know the demand would be that strong. I mean, yeah, it was overwhelming,” she said. “We want people to put down roots in a community. We want people to feel vested in their neighborhood, in their society. And that’s really what homeownership does.”
Peter Maloney, 26, is one of nearly 200 people who have closed on a SmartBuy mortgage this year and 450 borrowers are still in the pipeline with reserved loans.
“I had little over $40,000 (in student loans), but the way the program works, they would only pay 15 percent of the sale price of the home, which was about $30,000,” he said. “And I ended up paying the difference.”
Maloney is originally from the Chicago area. After finishing graduate school in Florida, he wanted to move closer to family. He considered Indiana for affordability, but then he found out about SmartBuy.
“It’s too good to be true. From my perspective, really awesome. I couldn’t believe it,” he said.
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Faust said IHDA is working hard to pull together funds to relaunch the program as soon as possible.
“The cost of education compared to average incomes is in a totally different league than where it was 15, 20, 30, 40 years ago,” she said. “The way the student debt is structured, how it gets paid, housing, all that combined is keeping a whole generation of people I think from really having that opportunity of freedom and independence and security that homeownership can provide.”
“The student loans were not going to completely prevent me from (buying a home),” Maloney said. “I knew I wanted this, but I knew it was going to be a big delay. It was going to be a big burden.”
Homebuyers who closed with SmartBuy loans received an average of more than $25,000 in student debt relief.
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IHDA does have other homebuyer assistance programs that are still available.
Click here to learn more.