Lender FAQs

A minimum credit score of 640 is required for all loan types. IHDA Mortgage will accept less than three scores as long as the lowest score, or only score, is 640 or higher and AUS is Approve/Eligible. A Co-borrower with no credit scores is acceptable if AUS is Approved/Eligible.

IHDA can offer no exceptions if the credit score is below 640.

Keywords: FICO, Credit, minimum

We updated our guidelines in August 2023 to allow up to 50%, depending on the loan type and/or credit score. All files with DTI above 45% are required to complete the Finally Home! pre-purchase education. Please see the charts below for details:

Max DTI Allowed By FICO and Loan Type

Pre-Purchase Education Required Per DTI Ratio

IHDA will consider exceptions for files whose debt-to-income exceeds the maximum allowed for the loan type. Regardless of loan type, back-end ratios over 50% will not be considered. For government loan types, IHDA Mortgage submits the exception to U.S. Bank for decisioning.

For the vast majority of homebuyers, if the borrower (or non-borrowing spouse) is not a first-time homebuyer, they will not be eligible.

IHDAccess Home requires the borrower to be either:

1. A first-time homebuyer, defined as the borrower(s) and the spouse NOT having an ownership interest in a principal residence within the last (3) years, or

2. a qualified veteran (as evidenced by a COE or DD214 certificate showing honorable discharge), or

3. a non-first-time homebuyer, purchasing a new primary residence within a targeted area. 

An easy way to figure out if your borrower is eligible is to use a True/False decision tree:

TRUE OR FALSE:

1. The borrower and NBS is/are first-time homebuyers. If that’s not true, then…

2. The borrower is buying a new primary residence in the targeted area. If that’s not true, then…

3. The borrower is an eligible veteran buying a new primary residence. If that’s not true, then…

4. They do not qualify for Access Home.

Borrowers attest on the Borrower Affidavit whether they have or have had an ownership interest in a primary residence. If any borrower or non-borrowing spouse indicates they have had an ownership interest in a principal residence within the last three years, then they are not eligible for IHDAccess Home unless they are purchasing in a targeted area. Lenders may not remove a non-borrowing spouse from the affidavit to force eligibility. Lenders are required to verify if the statements provided by the borrower on the affidavit are accurate. Verification methods can include (but are not limited to): The credit report, bank statements, tax returns, the 1003, and 3rd party database services such as CoreLogic/Cotality. IHDA does not require specific documentation to be included in the file for this verification, but if it is discovered during IHDA's review that the statements provided on the borrower affidavit are false, the file will be ineligible for delivery.

Underwriters have discretion when determining whether borrowers (and the NBS) qualify as first-time homebuyers eligible for the IHDAccess Home Program. See below for general guidelines and how IHDA reviews files for this requirement.

Verifying Borrower First-Time Homebuyer Status:

• Review items like the credit report, CoreLogic, bank statements, tax returns, and so on, in the same way as with any other transaction, to determine if the borrower owns additional property not reported on the 1003.

• If you find they own other property, you can request additional documentation as you see fit to support that it is an investment property and not their primary residence.

Verifying Non-Borrowing Spouse First-Time Homebuyer Status:

• The NBS attestation on the Borrower Affidavit is generally sufficient to determine if the NBS is an FTHB. IHDA will not require lenders to run additional verification for the NBS, since they are not borrowers and have not applied for a mortgage.

• If you find through the borrower’s tax returns (only if they are required by agency guidelines, as this is not an IHDA overlay) or other documentation from the borrower that they own property together, then you may want to get an LOX or request further documentation to confirm that they are both FTHB.

• The Borrower Affidavit is a legal attestation; misrepresenting first-time homebuyer status could cause serious legal problems with Fannie, Freddie, or HUD for the borrower and/or the non-borrowing spouse later.

See chart below for compatible types and the respective AUS systems allowed.

All IHDA conventional loans should be run either:

• Through DU as FNMA, IHDA Mortgage loans should be run through AUS as HFA Preferred

• Through LPA as FHLMC HFA Advantage

HomeReady and other conventional loan programs are not acceptable.

LPA is only acceptable when using FHLMC, FHA, and VA loans. FHLMC cannot be run through DU. VA and FHA must be run through DU or LPA with the appropriate 30-year purchase loan template selected.

All USDA loans must be run through GUS (Guaranteed Underwriting System) with an approve/accept decision.

AUS Systems Allowed By Loan Type

Yes, an electronic signature is allowed on all IHDA documents except the Mortgages, Rider to the 1st Mortgage, and the Mortgage Notes. Notarization is not required on IHDA documents that have been electronically signed.

For details, see excerpt below from our Procedural Guide:

All electronic signatures must be in accordance with the Electronic Signature Performance

Standards and must comply with all Federal, Agency, and state guidelines, including requirements of the E-Sign Act (Global & National Commerce Act/UETA) and State law. Note and Mortgage must be a “live” signature. When recertifying annually, lenders will certify to this and then be authorized to use anelectronic signature. When using an electronic signature on any IHDA Mortgage documents, a notary is not required.

E-SIGNATURE ON NON-IHDA DOCUMENTS:

U.S. Bank requires all lenders delivering files using e-signature on non-IHDA documents (and have not yet been authorized) to submit this form:

• Request for e-Sign Disclosures

U.S. Bank does not allow electronic signatures on the following documents:

Ineligible Documentation

Refer to the Funding Documentation Requirements in the Delivery and Funding section 900 C of the U.S. Bank Seller Guide.

• Notes or Modifications

• Power of Attorney

• Documents creating Revocable Trusts

• Any document requiring Notarization (i.e., Security Instrument, Riders, etc.)

• IRS and Social Security Administration documents. As of March 27, 2020, U.S. Bank will accept an electronically signed 4506-C.

No, IHDA does not allow manually underwritten loans.

No, anyone on the Mortgage and Note must also occupy the subject property as their primary residence.

High cost is not allowed by US Bank and/or IHDA Mortgage. IHDA Mortgage has no overlay for higher-priced mortgage loans. See excerpt from our procedural guide for details:

• High-Cost

  • NOT allowed by U.S. Bank and/or IHDA Mortgage

• High Price

  • U.S. Bank and IHDA Mortgage allow when U.S. Bank runs a test via the Federal Financial Institutions Examination Council (FFIEC).

No, IHDA Mortgage does not have a minimum loan amount. High-cost loans are not accepted.

MAX LTV BY LOAN TYPE

The LTV's listed below are not IHDA overlays; they are the maximum allowed by agency/U.S. Bank Guidelines and are provided for reference only.

*Conventional files must utilize the HFA Preferred or HFA Advantage Loan Type.

We do not have an overlay on CLTV. Please defer to the Agency guidelines for the appropriate loan type.

No, the rate reserved in TPO Connect is the rate at which the loan must close.

Yes, we have no overlays restricting this. Upon delivery of the closed loan to U.S. Bank, the lender must provide pay history.

Borrowers can leave the table with $250 plus anything above and beyond the borrower’s minimum investment of 1% or $1,000, whichever is greater (all other funds should be used for principal reduction).

How to calculate:

Any amount greater than the Maximum Cash Back to the Borrower or any non-borrower contributed credits (tax proration, seller credit, lender credits, etc.) that may be due to the borrower must be applied to principal reduction. IHDA Mortgage does not have a maximum principal reduction overlay.

IHDA Mortgage loans may not close in trust. Please remember to check the U.S. Bank HFA guide for additional credit and closing requirements.

The ONLY fee allowed to be charged on an IHDA 2nd mortgage is the recording fee.

Both Fannie Mae HFA Preferred and Freddie Mac HFA Advantage allow for reduced/discounted PMI coverage if the qualifying income (as entered into AUS) is at 80% AMI or lower per their own income limits (not IHDA’s).

Here are the guidelines for HFA Preferred or HFA Advantage for FNMA and FHLMC:

• FNMA: https://singlefamily.fanniemae.com/media/8661/display

• FHLMC: https://sf.freddiemac.com/content/_assets/resources/pdf/faq/hfa_factsheet.pdf

The Fannie/Freddie limits and income amounts can and usually will vary from the IHDA income calculator, since they are separate limits and use different calculation methods.

Use the FNMA/FHLMC lookup tools linked below to confirm which category the file falls in, and enter the income amount used in AUS for qualifying (not the IHDA income calculator amount).

• FNMA: https://ami-lookup-tool.fanniemae.com/amilookuptool/

• FHLMC: https://sf.freddiemac.com/working-with-us/affordable-lending/home-possible-eligibility-map

Your AUS feedback should reflect the correct required coverage if you have it running through as HFA Preferred/HFA Advantage.

IHDA does not approve MI companies, lenders are required to use a U.S. Bank approved MI company.

Please note, this list may change. If a company is not listed that you believe is permitted, please refer to U.S. Bank's AllRegs for confirmation.

IHDA Mortgage follows TRID guidelines on all 1st and 2nd mortgages and requires an LE & CD for both mortgages, regardless of whether either lien requires a payment. On the 2nd mortgage, only recording fees are allowed to be listed on the closing disclosure.

No, it may be requested if the pay stubs show that any borrower receives a bonus, overtime, or other sporadic income, or when the total income calculation puts income near the income limit.

For prior employment, a verbal VOE is acceptable.

IHDA Mortgage does not have overlays regarding homeowner's insurance coverage. See below for U.S. Bank Requirements (as of 03-01-21). Check U.S. Bank's AllRegs to confirm the amounts are still current.

HOMEOWNERS INSURANCE MAXIMUM DEDUCTIBLE - SEL-2021-005 Effective with Correspondent locks and new HFA loan reservations as of March 1, 2021, in alignment of agency requirements, U.S. Bank is updating our maximum deductible on Conventional loans as follows:

• Conventional Loans – Deductible does NOT exceed 5% of the face amount of the policy.

The maximum deductible for the following remains unchanged:

• FHA & VA Loans – Deductible does NOT exceed the greater of $2,500 or 2.5% of the face amount of the policy.

• USDA – Deductible does NOT exceed the greater of $1,000 or 1% of the face amount of the policy unless state law requirements differ.

For IHDA tax code compliance, a person is either married or single; there is no gray area. Both borrower AND spouse need to be qualified in cases where the spouse is not borrowing. It must be verified that the borrower AND the spouse are first-time homebuyers or Exempt, even if the non-borrowing spouse will not be residing in the property.

Include in the file:

• If the IHDA Borrower Affidavit (HO-12) is signed prior to closing, there is a signature line specifically for non-borrowing spouses (see below).

Please see below, as taken from the IHDA Procedural Guide:

Borrower must contribute a minimum investment to the transaction, which is required to be the greater of 1% of the purchase price or $1,000.00, which will be evidenced on the Loan Estimate and Closing Disclosure.

• The borrower may not use the tax proration toward the borrower's minimum investment; those funds must be from the borrower's own funds or, if allowable by the AUS (DU, etc.), from properly sourced gift funds.

• Earnest money, appraisal paid by borrower, inspection paid by borrower, pre-paid insurance paid by borrower, and money brought to the table can count towards their minimum investment. Please list any borrower pre-paid items on the CD as “POC.”

Generally, IHDA Mortgage Programs allow for the layering of other grants and assistance, so long as it meets the following requirements:

1. The file meets the program guidelines of the non-IHDA assistance, as determined by the lender’s underwriter

2. 1st lien is locked with IHDA and remains in 1st lien position (to be purchased and serviced by U.S. Bank)

3. IHDA DPA remains in the 2nd lien position

4. Other assistance takes a 3rd lien position (if it requires a lien and is not a true grant)

5. The file meets all applicable IHDA and U.S. Bank/Agency guidelines and has AUS approval (no manuals)

If you are unsure whether the other assistance is compatible with IHDA, email the program documentation (guidelines, assistance type, etc.) to mortgage@ihda.org. Our compliance team will review and advise.

No, for files to be eligible for delivery to IHDA, they must have a full appraisal (even if DU and LP allow), PIWs are not accepted.

IHDA requires both 1st and 2nd mortgages to comply with the State of Illinois Anti- Predatory Lending Database (APLD) program requirements.

For information regarding APLD requirements, refer to the APLD website (https://www.ilapld.com/Overview.aspx).

No, future rental income should NOT be included in the income calculator. Defer to the agency guidelines specific to the loan type when using it as income to qualify.

IHDA has no overlays regarding student loan payment calculation, defer to the agency guidelines specific to the loan type.

No, transactions using the FHA 203k loan type are not currently eligible for IHDA assistance.

Eligible Applications of IHDA Mortgage Funds

The list below is offered to clarify acceptable uses of IHDA Assistance. This list is not exhaustive. If you have an item not addressed below, please email us at Mortgage@ihda.org for review.

ELIGIBLE ITEMS

IHDA Mortgage Assistance can be applied towards:

• Down Payment

• Appraisal Fees

• Credit Report Fees

• Inspection Fees (property, well-water, termite, etc.)

• Realtor Commission (only if allowed per agency guidelines specific to the loan type)

• Homeowner Insurance Premiums

• Lender Fees (Underwriting, Application, Credit Reports, etc.)

• Title Fees (courier, notary, etc.)

• Other reasonable and customary costs/fees paid by the borrower

INELIGIBLE ITEMS

IHDA Mortgage Assistance cannot be applied towards:

• Repayment of existing debt of any kind (tax liens, installment debt, revolving debt, etc.), including repayment of an existing IHDA loan.

• Appraisal gaps – if the appraised value is lower than the sale price, while the assistance will still be calculated based on the sale price, it cannot be used to cover the gap. Borrowers may use their own funds (or gift funds if applicable) to remedy.

• Purchase of any items not attached to the property.

REMINDER: Even if the IHDA assistance is being used to cover a fee, all fees must still be included in the maximum fee calculation (see below on how to calculate).

Maximum Fee Calculation (IHDA's Overlay)

Cosigners are not permitted under IHDA Mortgage programs.

Co-borrowers are allowed, provided they occupy the property as their primary residence within 60 days of closing and meet all program requirements.

IHDA Mortgage programs do not allow non-occupant co-borrowers.

The lender will verify that both the borrower and the co-borrower(s) will occupy the property as a primary residence by examining the location of employment relative to the property and other factors to confirm future occupancy.