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Downpayment Plus® Consumer Center

Welcome to Downpayment Plus® Consumer Center, your information source for the Federal Home Loan Bank of Chicago's (CFHLBank) Affordable Housing Set-Aside Program (AHP) for 2002. The Wisconsin Partnership for Housing Development (WPHD) is working with the FHLBank to administer the program for member lenders based in the state of Wisconsin.

What is Downpayment Plus®?
Do I qualify for the program?
What Wisconsin lending institution are participating?
What is the maximum grant amount that may be awarded to eligible borrowers?
How does a borrower obtain a grant?
What are the eligible uses and ineligible uses of grant funds?
What types of properties are eligible?
Are there limitations on the type of first mortgage?
How is the household's income determined?
How is household size determined?
What are the lender requirements for homebuyer counseling?
Under what circumstances can counseling costs be paid by the Downpayment Plus grant?
Can a mortgage securing the promissory note/repayment agreement for a Downpayment Plus-funded grant be subordinated to a home equity loan at a later date?
What is the applicable retention period for the grant?
Under what circumstances must the grant be repaid?
How is the grant amount to be repaid calculated?
Where can I get more information?

1. What is Downpayment Plus®?

Downpayment Plus is a down payment and closing cost assistance program for low and moderate income home buyers, funded as a set-aside through the Affordable Housing Program (AHP) of the Federal Home Loan Bank (FHLBank) of Chicago.

In 2002, Downpayment Plus will provide more than $3 million in funds to benefit close to 1,000 households. Funds are available to all FHLBank of Chicago member financial institutions in Illinois and Wisconsin. The assistance provided is in the form of a grant paid on behalf of the borrower at the time the borrower closes on mortgage financing with a participating member financial institution.

2. Do I qualify for the program?

You may. Use the form below to find the program qualification income limits for your state, county, and the number of members in your household. [Terms of Service]

The program is available to first-time homebuyers with a combined annual household income at or below 80% of the median household income of the area where the property is located, adjusted for family size. The borrower must contribute 1% of the purchase price or $1,000, whichever is less, toward the purchase of the home. The purchaser(s) must complete a homebuyer or homeowner counseling program prior to receiving grant funds, and sign a certificate of eligibility that certifies their income.

As defined in the National Affordable Housing Act, a first time homebuyer is an individual who satisfies any one of the following criteria:

An individual and his or her spouse who have not owned a home during the three year period prior to the date of purchase of a home with AHP homeownership set-aside assistance
A single parent who has only owned with a former spouse while married
An individual who is a displaced homemaker and has only owned with a spouse
An individual who has only owned a property that was not in compliance with State, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.

3. What Wisconsin lending institution are participating?

For a list of Wisconsin institutions that have already signed on, go to the List of Wisconsin Downpayment Plus® Lenders.

4. What is the maximum grant amount that may be awarded to eligible borrowers?

The maximum grant is $3,500 per property. Downpayment Plus may not be used with other AHP subsidies for downpayment, closing cost assistance or homeownership counseling costs for the same borrower in the same transaction.

5. How does a borrower obtain a grant?

The Borrower:

contacts a participating member financial institution A list of participating institutions
applies for first mortgage financing with a participating member financial institution
provides an executed purchase contract for the property, evidence of income eligibility, homebuyer counseling and first time homebuyer eligibility, and makes the required equity contribution.

The Member Lender:

determines that the borrower is income-qualified (see above)for a grant
makes a grant reservation with WPHD
ensures that the borrower successfully completes an approved homebuyer counseling program
disburses the grant funds at closing when the first mortgage funds are disbursed
forwards required documentation to the program administrator.

6.) What are the eligible uses and ineligible uses of grant funds?

Eligible Uses

Downpayment assistance
Closing Costs
Costs required by lender to be paid in advance; items must be detailed on the Settlement Statement
Escrow Reserves deposited with the lender
Rehabilitation costs directly associated with acquisition
Homeownership counseling costs if they meet eligibility requirements (see Question 12)

Ineligible Uses

Reimbursement of earnest money or deposits
Cash back at closing. The grant amount will be reduced by any ineligible cash to the borrower at closing. The program administrators may make exceptions on a case by case basis.
Pre-paid life insurance
Using with any other AHP subsidy for the same borrower in the same transaction

7. What types of properties are eligible?

Owner-occupied one- or two-unit properties are eligible for grants. The property must be the borrower/grant recipient's primary residence. If a property is not located in Illinois or Wisconsin, it must be in the primary service area of the participating member. The property can be attached, detached or condominium.

Mobile homes and property sold on land contract are also eligible. A mortgage lender who offers mortgage financing for the purchase of a mobile home may include a Downpayment Plus grant provided the mobile home is located on property that is either owned by the household, or for which the household has a lease or rental agreement for a minimum of one year. Grant funds may also be used to assist borrowers who convert a land contract for deed to a regular mortgage loan.

8. Are there limitations on the type of first mortgage?

Lenders may use a wide range of mortgage programs, including conventional fixed or adjustable rate, FHA, VA, or IHDA and WHEDA, provided:

the loan term and the amortization period are identical, or, if the amortization period is longer, the term must be at least 15 years.
FHLBank Mortgage Partnership Finance®(MPF®), FNMA and FHLMC have agreed in the past to purchase mortgages made under this program provided the loans meet their requirements.
The grant can be combined with other federal, state and local grants or loans, such as CDBG funds.
Lenders may only charge their normal fees to borrowers receiving the grant.

9. How is the household's income determined?

A participating member financial institution shall use its own home mortgage lending and credit guidelines in determining what items are included or excluded in calculating income for purposes of Downpayment Plus. The same criteria should be used to calculate the income of those household members who are not borrowers.

10. How is household size determined?

Household size is based upon the number of people who will reside in the home being purchased. Divorced or separated borrowers who have joint custody of their children should include the children in their household count, even though the children may only live in the household on a part-time basis. Borrowers who do not have custody should not include the children in their household count. Full-time students not living at home while attending school should be included in the borrower's household count.

11. What are the lender requirements for homebuyer counseling?

The lender is required to certify that the borrower has completed a homebuyer counseling program provided by, or based on one provided by, an organization recognized as experienced in homebuyer or homeowner counseling and as approved by the administrator of the program. Contact the Illinois League of Financial Institutions or Wisconsin Partnership for Housing Development for details.

12. Under what circumstances can counseling costs be paid by the Downpayment Plus grant?

Counseling costs may be paid with the Downpayment Plus Grant if:

the costs are incurred in connection with counseling of homebuyers who actually purchase an AHP-assisted unit; and
the cost has not been covered by another funding source, including the member; and
the cost does not exceed $350 per household; and
the cost is identified on the Settlement Statement (HUD-1).

13. Can a mortgage securing the promissory note/repayment agreement for a Downpayment Plus-funded grant be subordinated to a home equity loan at a later date?

A mortgage used to secure the promissory note/repayment agreement for a Downpayment Plus-funded grant can be subordinated to a home equity loan.

14. What is the applicable retention period for the grant?

Grants are subject to a 60 month retention agreement to ensure that the property is retained as affordable housing. The retention period commences on the date the loan is closed. If the grant recipient occupies the home as their primary residence for the full term, the grant is totally forgiven at the conclusion of the retention period.

15. Under what circumstances must the grant be repaid?

The borrower must repay a pro-rata portion of the grant to the lender in any of the following circumstances:

the borrower sells the property prior to the end of the retention period to a non income-eligible purchaser, and realizes a net gain on the sale. Repayment is waived if the borrower realizes no net gain on the sale, or if the residence is sold to another income-eligible borrower (income less than or equal to 80% of the area median).
the mortgage is refinanced with a net gain and the retention agreement no longer applies to the property.
the borrower is no longer using the property as a primary residence.

The Federal Home Loan Bank of Chicago must be given notice of any sale, refinancing, foreclosure or change in owner-occupied status occurring prior to the end of the retention period. In the case of a foreclosure, the obligation to repay any subsidy is terminated.

16. How is the grant amount to be repaid calculated?

In the case of a sale, a pro rata share of the direct subsidy or homeownership set-aside funds shall be repaid to the Bank from any net gain realized upon the sale of the unit after deduction for sales expenses, unless the purchaser is a low or moderate income household, i.e. at time of execution of sales contract having an income of 80% or less are area median based on household size.
In the case of a refinancing, a pro rata share of the subsidy shall be repaid to the Bank from any net gain realized upon refinancing unless the unit continues to be subject to a legally enforceable retention agreement.

Net gain on sale is calculated as the difference between the original purchase price and the new sales price, less seller costs incurred in the new transaction. The seller costs should be detailed on the Settlement Statement. The amount of the grant to be repaid shall not exceed the net gain on sale.

17. Where can I get more information?

For more information follow this link to FHLBC's Frequently Asked Questions. For all FHLBC member banks go to the list of all member banks.