An IDA or Individual Development Account, is an excellent way to begin saving for education, one’s own business, or a first home purchase. Recently, a bill introduced by Senator Jansen, was passed that extends the use of IDAs for “qualified home improvement”. For more details about this program, please refer to the bottom of this document.
Combining savings from an IDA, with the CHN’s Oakland HOME Program, has proven to be a successful match for a few Community Housing Network clients. The IDA allowed them to build a substantial down payment towards the purchase of the new home while the CHN programs reduced the mortgage and/or closing costs, and in some cases, also paid for rehab to the home.
What makes an IDA different than a regular savings account is the matched dollars provided to participants who are income eligible for this program. Not only is the person contributing to their own future but for every dollar the participant saves, the participating agency will match it with another $2 for school or business or $3 for one’s first home purchase. A maximum of a $1000 of the individual’s savings can be matched. For instance, if an individual saves the maximum of $1000 for their first home, they will receive another $3000 in matched funds. This is a great way to save money for the down payment on a home.
Here’s a list of institutions and organizations that might offer an IDA: (updated 6/8/2014)
United Way of Southeastern Michigan
Lighthouse of Oakland County
Oakland Livingston Human Service Agency (OLHSA)
The following Financial Institutions also have Individual Development Accounts:
• Citizens Bank
• Fifth Third Bancorp
• Washington Mutual
• Wells Fargo
Energy Efficiency Uses for IDAs (SB 1635):IDAs may also be used for home improvement. Introduced by Senator Jansen, the bill extends the eligible uses for IDAs to be for a “qualified home improvement,” which is defined as “the purchase and installation of any qualified Energy Star product intended for residential or noncommercial use that meets or exceeds the applicable Energy Star energy-efficiency guidelines developed by the U.S. Environmental Protection Agency and the U.S. Department of Energy, including windows, doors, insulation, high-efficiency heating and cooling equipment, and any appliances such as dishwashers, clothes washers, and refrigerators.”