Prohibition of Pairing Competitive AHP Down Payment Assistance with an FHA Mortgage
Each year, the Federal Home Loan Bank of Chicago (FHLBC) contributes 10% of its earnings to the Affordable Housing Program. Currently, 65% of the contribution is allocated to the competitive Affordable Housing Program (AHP) and 35% is allocated to the set-aside program, also known as the Downpayment Plus® (DPP®) Programs.

Competitive AHP awards may be used for the acquisition, new construction, and/or rehabilitation of affordable rental or owner-occupied housing. The FHLBC has made many awards to project sponsors using AHP to provide down payment assistance to income-eligible homebuyers.

In 2010, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2010-42, which provided guidance concerning the use of the FHLBanks’ set-aside programs in conjunction with financing insured by the Federal Housing Administration (FHA). The letter declined to provide guidance on the use of competitive AHP funds with FHA-insured financing. Because of this, the FHLBC has not allowed the two to be paired.

Discussion has taken place among Community Investment Officers throughout the FHLBank System, and the issue has been raised with HUD; however, to date, no additional guidance has been published.

Until further notice, the policy of the FHLBC remains that competitive AHP awards used for down payment assistance may not be paired with FHA-insured financing. Exceptions will not be granted.

Please contact Community Investment at (312) 565-5824 or ci@fhlbc.com with any questions.

Federal Home Loan Bank of Chicago
200 East Randolph Drive
Chicago, IL 60601
www.fhlbc.com		 Copyright © 2015, Federal Home Loan Bank of Chicago. “Downpayment Plus,” “DPP,” "Downpayment Plus Advantage," and "DPP Advantage" are registered trademarks of the Federal Home Loan Bank of Chicago.
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