The Property Has to Clear Its Own Test
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
The property test is the quietest of the six, right up until it is not. Two rules here routinely surprise buyers who have financed a home before.
What qualifies
A qualified dwelling is a one to two unit residence located in Illinois and designed for residential use. IHDA lists the acceptable types:
- Single-family detached home
- Townhome
- Condominium units approved by FHA/HUD, VA, Fannie Mae or Freddie Mac, which must be warrantable or approved and reviewed by U.S. Bank where the lender is not delegated to review
- Community Land Trusts, Fannie Mae or Freddie Mac only
- Planned Unit Development, single-family
- Duplex
Two-unit purchases carry extra conditions. Landlord counseling or education certification is required from all borrowers before closing, agency minimum investment and reserve requirements must be met, automated findings must be followed, and the borrower must occupy one of the two units as their primary residence. Education requirements.
What does not
IHDA does not permit anything above two units. Beyond that, the exclusion list is specific: co-op apartment units, manufactured homes, mobile homes, log homes, dome homes, any property with an unresolved "subject to" on the appraisal, and any property over 5 acres.
The manufactured home exclusion is absolute. The guide states plainly that no manufactured homes are permitted for any loan type, so there is no program on the menu that changes the answer.
No portion of the residence may be specifically designed for commercial use.
The appraisal rule worth planning around
A full appraisal is required on all loans, and Property Inspection Waivers are not allowed. The rule sits in the origination guide published in the IHDA Document Library.
That is a real scheduling difference from a conventional file, where an appraisal waiver on a strong automated finding can remove a week or more from the timeline. On an IHDA file it never happens. Build the appraisal into the schedule from day one.
Where a property has multiple parcel identification numbers, the appraiser must comment on whether the additional parcels are buildable, to meet tax code requirements.
What the assistance itself cannot pay for
Three exclusions, and the middle one is the one to plan around.
- Repayment of existing debt, including tax liens, installment debt and revolving debt.
- Appraisal gaps. Where the appraised value comes in under the sale price, the assistance is still calculated on the sale price, but it cannot be used to cover the difference.
- Items not attached to the property.
Because waivers are not allowed, every IHDA file gets an appraised value, which means the gap scenario is live on every purchase rather than occasional. How your own funds interact with this.
Occupancy, and what follows from it
All borrowers occupy within 60 days of close and must maintain occupancy. Because of that, IHDA instructs that an Assignment of Rents should not be used in connection with the mortgage. Investment properties and second homes are not eligible.
If a borrower will own more than one property at closing, the subject property must be the owner-occupied principal residence.
See also the full eligibility test and credit and DTI.
Frequently asked questions
What types of property can you buy with IHDA assistance?
One to two unit residences located in Illinois and designed for residential use: single-family detached homes, townhomes, approved warrantable condominiums, Community Land Trusts through Fannie Mae or Freddie Mac only, single-family planned unit developments, and duplexes. Two-unit purchases require landlord counseling certification and the borrower must occupy one of the units.
Can you use IHDA down payment assistance on a manufactured home?
No. The IHDA guide states that no manufactured homes are permitted for any loan type, and lists manufactured and mobile homes among the property types that are not currently eligible. The same exclusion list covers co-op apartment units, log homes, dome homes, properties with an unresolved subject-to condition on the appraisal, and any property over 5 acres.
Does IHDA allow appraisal waivers?
No. The guide states that a full appraisal is required on all loans and that Property Inspection Waivers are not allowed. This differs from a standard conventional loan, where an appraisal waiver may be offered on a strong automated underwriting finding, so an IHDA file should be scheduled on the assumption that a full appraisal will be ordered.
Can IHDA assistance cover the difference if the appraisal comes in low?
No. The guide states that where the appraised value is lower than the sale price, the assistance will still be calculated based on the sale price but cannot be used to cover the gap. Assistance also cannot be used to repay existing debt such as tax liens, installment debt or revolving debt, or to purchase items not attached to the property.
Can I buy a duplex with Illinois down payment assistance?
Yes, up to two units. IHDA does not permit anything above two unit properties. On a two-unit purchase, all borrowers must provide certification of landlord counseling or education before closing, minimum investment and reserves must be met per agency guidelines, automated underwriting findings must be followed, and the borrower must occupy one of the two units as their primary residence. Freddie Mac files require Landlord Education in addition to homebuyer education.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal or tax advice. IHDA program terms, income limits and purchase price limits are set by the Illinois Housing Development Authority and change; figures here carry the date we verified them and IHDA's own disclaimer applies, that funding and availability are subject to change and are not guaranteed until a complete reservation is placed. Loans are subject to borrower and property qualification.