Frequently Asked Questions

1. What kind of employer can participate in REACH Illinois?

Any employer can offer an employer-assisted housing benefit to employees. A range of employers, from large corporations to universities, small manufacturers to municipalities, are participating in this program.

2. Is there a minimum amount my company needs to invest in the program?

An employer can determine the size and budget for the program based upon its needs. An employer is not required to invest a specific amount in the program in order for its employees to receive the state down payment match. However, in order to receive state donation tax credits, an eligible program must have a minimum gross employer investment of $10,000. This can be achieved through a $10,000 donation from a single employer or several smaller employers can pool their resources to reach the $10,000 minimum investment.

3. Is there a minimum/maximum amount of assistance my company needs to invest per employee?

An employer determines the amount of assistance to provide to its employees. However, in order for the employee to be eligible for state matching funds, an employer must provide at least $1,000 of direct assistance per employee.

4. What kind of assistance can my company provide?

To qualify for the tax credit, Illinois employers can offer down payment and closing cost assistance, reduced interest mortgages, mortgage guarantee programs, rent subsidies or individual development savings account plans to their employees. Investments in counseling and program administration are also eligible costs. All expenditures must go through the nonprofit sponsor.

5. Is there a minimum/maximum purchase price allowed under the REACH Illinois program?

There are no purchase price limits under the REACH Illinois program, however an employer may choose to set guidelines for its program.

6. Is there a maximum employee household income allowed under the REACH Illinois program?

No. An employer designs its own employee income perimeters.
However, in order to leverage state matching funds, an employee household income cannot exceed 80% of the local Area Median Income. See (link) for the Area Median Incomes in your county. To take advantage of the state tax credits (benefit to the employer) employees’ household incomes must not exceed 120% of the Area Median Income.

7. Do participating employees need to make a minimum down payment contribution?

Yes. The REACH Illinois program requires the employees contribute at least $1,000 from their own savings to qualify for the state matching funds.

8. Are there geographic limitations on home purchases?

Three are no geographic limitations connected with the state matching funds. However, the program must contain a “live near work” component in order for the employer to be eligible to receive the state tax credit.

9. Do employees need to be first-time homebuyers in order to qualify for state matching funds?

No. There is no first-time home buyer requirement for the employee to
receive state matching funds or for the employer to receive the state tax credits.

10. If the employee household income exceeds 120% of the Area
Median Income during the forgiveness period, is my company still eligible to receive the state donation tax credit? Similarly, if the employees’ income exceeds 80% of the Area Median Income during the forgiveness period, is the employee still eligible to receive the state down payment match funds?

Yes. The qualifying employee household income is determined at closing. Any subsequent increase in employee household income does not impact the state match or state tax credit.

11. Is my company required to use a particular non-profit counseling agency to provide the pre-purchase homeownership education component of the program?

Yes. In order to access the state matching funds and the state tax credits, the non-profit counseling agency must be a pre-approved REACH Illinois partner.

12. Is there a minimum/maximum number of employees my company needs to assist in order to qualify for the tax credits?

No. The only requirement is that the program contains a minimum gross employer investment (from either a single employer or group of employers) of at least $10,000.

13. Can my company receive state donation tax credits for the internal costs incurred to implement the program?

No. State donation tax credits are only available for those costs incurred for direct assistance to employees and payments made to qualified non-profit organizations for housing counseling and third party administration of the program.

14. Can my company choose to assist only a certain category of employees?

Yes. An employer can define a program by targeting certain types of employees, so long as the classification does not violate federal, state, or local laws.

15. Can my company benefit from the tax credits even though it is a non-profit or does not have state income tax liability?

Yes. The state donation tax credits are transferable, so that an employer can “sell” the credits to an entity with a state tax liability to recoup a portion of its investment. The non-profit program administrator and housing counseling partner can assist the employer in identifying resources to effectuate the sale.

16. Do employee participants in REACH Illinois have to use specific mortgage lenders?

No. REACH Illinois is not limited to specific lenders, though employers
may design their individual employer-assisted housing programs in participation with certain mortgage lenders who may offer special incentives to participating employees.

17. Can my company get tax credits for providing rental assistance to employees?

Yes. However, state match dollars are not available to employees who use the employer contribution toward rent or security deposits.

18. What if an employee leaves the company before the end of the loan forgiveness period?

If the employer has an employment requirement as a component of its REACH Illinois program, the employer needs to contact the non-profit housing counseling agency regarding recapture of unforgiven funds. The housing counseling agency will employ its best efforts to recapture those funds but will have no legal liability to the employer if it is unable to do so.

19. Does the assistance to employee constitute taxable income?

The direct financial assistance provided by the employer to the employee does constitute taxable income in the amount that is forgiven annually. The employer needs to report the pro-rated portion annually to the IRS. The state match does not constitute taxable income.

20. What are the steps for starting an employer-assisted housing program?

First, Housing Action will provide a proposal to enable the employer to assess the costs and benefits of the program. Second, Housing Action will create a customized program that meets your objectives as an employer. Housing Action facilitates a partnership with a local housing counseling agency to deliver the program. Once the partnership is established, the employer can announce the benefit and begin referring interested and qualified employees to the local partner.

21. What are the steps for employees to participate in the program?

Employees who are interested in the program complete an application form, which is based on criteria established by the employer. Eligible employees are referred to the counseling agency for one-on-one credit counseling and homebuyer education classes. When they have completed the homebuyer education, employees can begin shopping for a home. The counseling agency can assist the employee throughout the whole process, including closing and post-purchase counseling.

For more information, contact:

Katie Gottschall Donohue
Director of Technical Assistance
312-939-6074
katie@housingactionil.org