SmartBuy Provides Student Loan Debt Relief for Homebuyers


December 2020 brought about two exciting programs available through IHDA to assist those with student debt, working-class families, and DACA recipients to achieve the dream of homeownership. The SmartBuy program provides down payment assistance as well as student loan debt relief to those who qualify. Opening Doors (also known as Abriendo Puertas) allows DACA recipients (Dreamers) to obtain down payment assistance where in the past, they were ineligible.


The Illinois Housing Development Authority (IHDA) has been partnering with lenders for years in the quest to help first time homebuyers achieve the dream of homeownership. A major roadblock for many young buyers is student loan debt. In order to overcome that obstacle, IHDA developed the SmartBuy program. This initative provides two major types of assistance; down payment assistance of up to $5,000, which can be used for closing costs and/or a down payment, and secondly, a student debt relief program that can PAY OFF up to $40,000 of student loan debt! The program provides student loan debt relief for 15% of the purchase price of the property. An example is a home purchase of $200,000 can provide up to $30,000 of student loan re-payment. If your clients loans amount to $30,000 or less (in this example), this debt will be completely paid off at the time of closing.  It must be noted that if the buyer’s student loan debt exceeds 15% of the property purchase price, the difference must be brought to closing in order to pay off the student loan. A few other noteworthy points are:

  • SmartBuy is open to first time home buyers and repeat buyers and is available in every county in the state.
  • If there are two buyers and both have student debt, both will have the opportunity to have their debt repaid as long as the combined debt equals or is less than 15% of the purchase price, or they bring the difference to closing.  The program allows paying off one of the two buyer’s student loan debts if there aren’t sufficient funds to pay off the second buyer’s student loans.
  • Gifting is allowable to help with a down payment or payment of student debt over 15% of the purchase price of the property, however the buyer(s) must be able to contribute a minimum of $1,000 or 1% of the purchase price of the own funds.
  • Home buyers can purchase a more expensive property, however the $40,000 student loan debt relief maximum will still apply.

The Illinois State Treasurer’s office reports that the average value of student loan debt in Illinois is $29,855 and more than 2 million residents carry student loan debt. A good deal of potential first time homebuyers could see their way past the dead weight of student debt and into a home with this type of relief. Sources at IHDA confirm that the program has been allocated enough funds to serve between 550-1000 borrowers depending on the individual loan amounts provided. 

Check out more details, FAQS, eligibility, requirements, list of participating lenders, and more. 

Mainstreet affiliate member, Karlton Uhm with Fairway Independent Mortgage Corporation, advised that while IHDA assistance often leads to higher closing costs, the benefits outweigh the cost. “Student loan debt is often a boat anchor for many young professionals pursuing the purchase of a home,” advised Karlton. “The ability to eliminate student loan debt far exceeds the potentially higher closing costs. The program will work best for those whose debt can be fully forgiven by the assistance, and not have to bring the difference to closing.”


DACA recipients, also known as Dreamers, have typically been disqualified from governmental aid in obtaining down payment assistance even though they have social security numbers and pay local, state, and federal taxes. Opening Doors paves the way for Dreamers and other eligible Illinois residents to move past renting and into a home of their own. The program provides $6,000 in down payment/closing cost assistance which is forgiven after 5 years in the home. Other program highlights include:

  • Opening Doors is open to first time home buyers and repeat buyers and is available in every county in the state.
  • New construction is allowed
  • 30 year, fixed rate mortgage 

Various requirements apply and additional information can be found here.

Regarding the length of time from application to closing, Uhm advised that the programs take slightly longer to close, between 30-45 days, due to additional paperwork and information that must be processed.

According to IHDA, as long as the loan type permits DACA recipients, both programs will allow for Dreamers to take advantage of the assistance. As of January 19th, 2021, DACA recipients are now eligible for FHA loans!

While these programs are available to repeat homebuyers, those looking to refinance do not qualify.

Finally, Uhm believes that “creating lending programs to buyers previously unable to purchase homes is a great opportunity for Realtors and participating lenders to increase business and their brand exposure.”  Contact your participating lender or the IHDA website for further information on program guidelines and requirements.