TaxSmart Mortgage Credit Certificate

TaxSmart is a Mortgage Credit Certificate (MCC) program which entitles first-time home buyers to a federal income tax credit. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive an MCC to reduce income taxes by an amount equal to 20% of the interest paid on a mortgage. The tax credit is available each year the home buyer continues to live in a home financed under this program.

Federal law requires that a home buyer satisfy each of the following guidelines:

• First-Time Home Buyer.
  Any person who has not owned a principal residence at any time during the three years prior to closing a loan under this program is considered a first-time home buyer. Non first-time home buyers are also eligible if they purchase a home in a designated target area. See below for list of target areas by census tract.
• Income.
  Because the program is intended to benefit low- and moderate-income households, federal law imposes maximum limits* on the annual gross income of home buyers.
• Purchase Price.
  Federal law also imposes limits on the purchase price** of homes financed under the program.
• Principal Residence.
  The home buyer must occupy the home as a principal residence within a reasonable period which, under most circumstances, may not exceed 60 days after financing is provided. A principal residence is a home occupied primarily for residential purposes and does not include a home used as an investment property, as a recreational home or a home in which 15 percent or more of its total area is used for a trade or business.
• One-to-Four-Family Home.
  Each residence financed must contain 1-4 units. A one-family residence includes a detached home, one unit of a duplex, a townhouse or a condominium unit. Manufactured housing or mobile homes qualify only if the unit has at least 400 square feet of living space, if it is more than 102 inches wide and if it is permanently affixed to real property. If the residence is a 2-4 unit building, one unit of the residence must be the principal residence of the building owner and the residence must have been first occupied for residential purposes at least five years prior to applying for a mortgage loan financed in connection with the MCC. Land adjoining the home is considered part of the home only if it maintains the home's livability and is not, other than incidentally, a source of income to the owner.
• New Mortgage.
  The mortgage loan financed in connection with a credit certificate is required to be a new mortgage and may not replace a prior mortgage on the home (whether or not previously repaid).
• Program Area.
  In order to be eligible for a certificate, the home financed under the program must be located in the City of Chicago.

Under this program, mortgage credit certificates will be issued to eligible home buyers on a first-come, first-served basis. The certificates are available in connection with any type of mortgage loan (except loans from tax-exempt bond programs), including fixed rate and adjustable rate mortgages.

This description is only a summary of the requirements under the TaxSmart program. Applications and additional information are available from participating TaxSmart Mortgage Lenders.

Fire, Police & Teacher Grants

Public Safety Officer Homeownership Incentive Program

Chicago police officers, firefighters, and paramedics (referred to here as "public safety officers") who purchase homes in targeted areas of Chicago may be eligible to receive $3,000 in down payment and closing costs assistance. If the purchase is located in a CHA Redevelopment Property (defined as a residential development constructed as part of the CHA Plan for Transformation, as designated by the Chicago Housing Authority), $7,500 in assistance may be available.

The deferred loan is available per household and may be used for a down payment or closing costs, including title insurance; credit reports; recording fees; appraisals; points; transfer stamps; third-party property inspection fees; first year's payment of mortgage insurance; and other customary bank related closing charges. This loan will be fully forgiven if the officer resides in the home for at least five years.

Program Requirements

• The applicant must be a non-probationary police officer in good standing with the Chicago Police Department or a non-probationary firefighter or paramedic with the Chicago Fire Department;
• Assistance is only available for properties located within the City of Chicago;
• The applicant must be purchasing a single-family property (a building with 1 to 4 units) located within a census tract in Chicago where a minimum of 50% of the residents have incomes below 80% of the area median income, based on current census data or within a CHA Redevelopment Property;
• The public safety officer must be one of the borrowers on the first mortgage loan and must live in the acquired home as his or her primary residence for at least five years after acquisition;
• Contribute at least 1% of personal funds towards the down payment on the purchase price of the property.

Teacher Housing Resource Center

Homes Made Affordable through Developer Incentives

Affordable Condos - CPAN

Chicago Partnership for Affordable Neighborhoods (CPAN)
CPAN is a partnership between the City of Chicago and developers to ensure opportunities for affordable condominiums in market rate developments, particularly in appreciating neighborhoods, through two steps: developer write-down and purchase price assistance to homebuyers.

Eligible homebuyers are first-time buyers (have not owned a home within the last three years) with incomes up to 100% of median (see table for maximum household incomes by family size). Purchase price assistance may be available for households with incomes up to 80% of median, who demonstrate a gap between the amount of the first mortgage they can secure, and the affordable sales price.

To be eligible to purchase an affordable home through CPAN, follow these steps:

1. Your first step is to receive pre-purchase counseling. Pre-purchase counseling will provide information on the obligations and responsibilities associated with owning a home, help you develop strategies to establish good credit if necessary and refer you to lending institutions and mortgage products. Please see list of agencies providing free counseling (under See Also in the left hand column).

Note: You must receive certificates of completion for both general homebuyer counseling and condo ownership counseling.

2. Meet with a mortgage lender to obtain a mortgage loan approval; Eligible recipients will need to maximize their purchasing power through a first mortgage loan before receiving Purchase Price Assistance.
3. Call the Chicago Department of Housing at 312-742-0637 to schedule an appointment to determine eligibility for the CPAN program.

Eligible buyers may also qualify for TaxSmart Mortgage Credit Certificate (MCC),

Affordable Housing Requirements Program

Affordable units required
The City of Chicago has adopted an affordable housing policy affecting for-sale and rental residential developments of 10 or more units that consist of new construction, substantial rehabilitation, or condominium conversions whenever these developments include city funding assistance. This assistance may come in the form of City property for less than its fair market value, in which case at least 10% of the units are required to be affordable or another form of City financial assistance in which case at least 20% of the units are required to be affordable.

Affordability levels
In for-sale developments, units must be affordable to and occupied by households at or below 100% of area median income. See table below.

Parking provision for affordable units
Parking must be included in the sale price or rent of the units unless the developer can demonstrate to the satisfaction of the City that at least one of the following conditions is present:

• the property offers less than one parking space per unit;
• the property is especially well-served by public transportation;
• the property is convenient to employment, shopping and services; or
• there is ample and available on-street parking nearby.

Pricing of affordable units
The sale price of an affordable unit must be based on a household size of 1.5 persons per bedroom. Developers are encouraged to provide the same mix of unit sizes (by bedroom count) in the affordable and market-rate components.

Affordability length
Affordable units are required to stay affordable for 30 years, subject to the following:

• In the case of for-sale units, the City will record a lien in the amount of the difference (at time of sale) between the unit's market price and the affordable price. If owners re-sell to income-eligible buyers at an affordable price, the lien stays with the home and will be forgiven after 30 years.
• If an owner sells to a non-income eligible buyer or sells at a price that is not affordable to an eligible buyer, the seller must pay the lien.
• If a developer fails to sell an affordable unit at an affordable price to an income eligible buyer, the developer must pay a $100,000 fee to the City, which will be used for the development of future affordable housing units.

City Lots for City Living

The City Lots for City Living Program offers affordable housing to income-eligible purchasers of one single-family property. Contact the agent in the community of your choice for an application package & site visit.

Eligible Applicants
Households purchasing a newly constructed home through a DOH sponsored program, whose incomes are at or below 120% of the Chicago Primary Metropolitan Statistical Area Median are eligible for this program.

Terms of Assistance
No purchase price subsidy is provided.

Recapture
In the event the property is sold within four (4) years of the original purchase, where the net proceeds exceed the original purchase price, the City shall be entitled to recapture, and the homeowner shall be obligated to pay the City, an amount equal to the discount.

If, however, the net proceeds are insufficient to repay the City's investment, the City may forgive a prorated share of the investment, based on the length of time the homeowner has occupied the unit during the affordability period. In this instance, a home owner will not be allowed to recover more than their initial investment in the property. The affordability period for City Lots for City Living is four (4) years.

New Homes for Chicago

Now in its eleventh year, the New Homes for Chicago program has approved over 65 developments, or over 1,600 new affordable condominiums, single family or two-flat homes, which are either completed or in process throughout Chicago. Using business incentives to reduce development costs, the City encourages developers to provide new construction of homes for purchase by moderate-income working individuals and families. Prices under this program are capped at $195,000 for single family homes or condos and $265,000 for two-flats.

Eligible homebuyers may earn up to 100% of the area median income.

Eligible buyers may also qualify for TaxSmart Mortgage Credit Certificate (MCC).

Purchase price assistance is available for households at 80% of the area median or below, (see chart above) who demonstrate a gap between the amount of the first mortgage they can secure and the affordable sales price. Eligible recipients need to maximize their purchasing power through a first mortgage before receiving assistance. Assistance is in the form of a deferred loan at 0% interest, which is reduced on an annual pro rata basis.