Illinois Welcome (JohnTheBear, Jan 2009) Illinois

‘Overwhelming’ demand for SmartBuy program offering student loan relief for homebuyers

Paying Off Student Loans for a home buyer in Illinois

As millions of Americans continue to struggle with $1.7 trillion in outstanding student loan debt, at least one state with a declining population has come up with a solution to attract new residents: an offer to pay off their student loans.

Illinois’s “SmartBuy” program does just that and can pay off up to $40,000 in student loans for borrowers who purchase a home there. Some studies have shown that borrowers struggling with student loan debt are far less likely to be able to get a mortgage to buy a home.

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.

Kristin Faust is the executive director of the Illinois Housing Development Authority (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.”

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.

“Owning a home is a key way to build wealth and pass it from one generation to the next, so delays in purchasing a home ripple through the economy and individual households,” Faust said.

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. Homebuyers who closed with SmartBuy loans received an average of more than $25,000 in student debt relief.

Sources: