Peter Maloney wanted to move back to the Chicago area from Florida, but with $44,000 in student loans to repay he figured it would be several years before he could buy a home.
Maloney, 26, considered moving to Indiana, where he would be close to family and homes are less expensive. But he and his fiancee were sold on Illinois after learning about a state program that helps homebuyers pay off student loans and provides down payment assistance.
In June, Maloney will close on the purchase of a two-bedroom, two-bath condominium in Plainfield, Ill. “It definitely made the decision (to move) easier, and buying a home possible,” he said.
The SmartBuy program, offered by the Illinois Housing Development Authority, has drawn interest from other out-of-state buyers too, said Executive Director Kristin Faust.
The agency hopes the program, which began in December, will help remove one financial barrier to homeownership and make access more equitable.
The program will pay off up to $40,000 in student loans, or a loan amount equal to 15% of the home purchase price, whichever is lower. It will also provide a $5,000 loan toward a down payment or closing costs.
The state allocated up to $25 million to the program in Gov. J.B. Pritzker’s 2019 Rebuild Illinois capital plan. The money is expected to serve between 600 and 1,000 homebuyers.
To date, the agency has paid off an average of $24,100 in student loan debt for each buyer.
Prospective homebuyers in the Chicago area must have household income of no more than $109,200 to be eligible. The home purchase price limit is between $325,000 and more than $500,000, depending on the location and type of home.
The program comes with other caveats. A buyer’s full outstanding student debt must be paid off during the home purchase. The home must be the buyer’s primary residence, and if they sell within three years they must repay a portion of the student loan assistance and sell to someone who meets the program’s income requirements. The sales price cannot exceed the program’s limits.