Home Purchase Assistance Program

As a full-time or part-time benefits eligible employee of Drexel University, you are eligible to receive one home purchase assistance loan and one renovation loan. These loans cannot be used concurrently. You must wait until full forgiveness of one loan (renovation or home purchase) before beginning the other loan program.

Yes. Full-time and part-time benefits eligible employees are eligible for this benefit.

If you are currently on a performance improvement plan, we advise you to wait until you have completed your performance improvement plan before applying for this benefit. If you decide to receive this benefit while on a performance improvement plan and your employment at Drexel University ends, you may have to repay the remaining portion of the loan.

If you are currently on a one-year, three-year or other time-limited contract, we advise you to wait until you are hired permanently before applying for this benefit. If you decide to receive this benefit while on a time-limited contract, you may have to repay the remaining portion of the loan in the event that your contract is not renewed.

No. Drexel will only provide one forgivable loan per new home purchase. If the home is purchased jointly by two Drexel University employees, both employees must sign the application and other required documentation. Drexel University will continue to forgive the loan so long as one of the employees remains a full-time or part-time benefits eligible Drexel University employee and provided that that employee remains in the purchased home as their primary residence.

Yes. The program is for all full-time/part-time Benefit eligible employees purchasing a home in the defined borders. It is not restricted to first-time buyers; however, you must move to the new home and reside in the home as your primary residence.

No. The home must be used as the primary residence for the entire time period in order for Drexel University to forgive the loan.

No. This program is not retroactive.

No. The loan must be used for the purchase of a primary residence.

No.

No. The benefit must be applied towards the purchase of a home in the defined geographic boundaries.

Unfortunately for now the scope of the program has been limited to the geographic borders set forth in the program guidelines. The immediate strategic plan “to live where you work” is confined to the West Philadelphia area.

Drexel University will provide up to $15,000 through a forgivable loan to any benefits eligible full-time or part-time employee for the purchase of a home within the defined borders. Drexel shall provide a $5,000 forgivable loan, with the option of $2,500 additional in a matching grant, to an eligible employee toward the renovation of a home within the defined borders.

Drexel University will forgive this loan on the following schedule:

1. One year from your closing date, 20 percent of the loan will be forgiven and the employee is responsible for $12,000 repayment in the event that they are no longer a full-time benefits-eligible employee of Drexel University or in the event that they are no longer living in the home as their primary residence.
2. Two years from your closing date, 40 pervent of the loan will be forgiven and the employee is responsible for $9,000 repayment in the event that they are no longer a full-time benefits-eligible employee of Drexel University or in the event that they are no longer living in the home as their primary residence.
3. Three years from your closing date, 60 percent of the loan will be forgiven and the employee is responsible for $6,000 repayment in the event that they are no longer a full-time benefits-eligible employee of Drexel University or in the event that they are no longer living in the home as their primary residence.
4. Four years from your closing date, 80 percent of the loan will be forgiven and the employee is responsible for $3,000 repayment in the event that they are no longer a full-time benefits-eligible employee of Drexel University or in the event that they are no longer living in the home as their primary residence.
5. Five years from your closing date, 100 percent of the loan will be forgiven and the employee is responsible for $0 repayment in the event that they are no longer a full-time benefits-eligible employee of Drexel University or in the event that they are no longer living in the home as their primary residence.

Individual tax conditions vary and the University cannot estimate the tax implications for participants. We recommend consulting a tax advisor with questions concerning your particular tax situation.

Do I have to pay tax on the loan amount?
The amount of the loan that is forgiven in any one year will be reported as taxable income to the employee and appropriate federal, state and social security taxes will be withheld. This will first appear on the employee’s paycheck on the anniversary month of the loan disbursement and will be divided into equal amounts on each paycheck. For example, on a $15,000 loan disbursed Janu. 19, 2021, the employee would have $250 of imputed income on each paycheck from Jan. 2022 through Dec. 2022 for a total of $3,000 of for the year. This will appear on your paycheck under the Federally Taxable Benefits as “Employee Home Purchase Program” and is referred to as “Fringe Benefit Tax.”

What is Imputed Interest?
Even though the University does not charge interest on the Loan, the IRS requires that for a forgivable loan of more than $10,000, the amount over $10,000 is subject to imputed interest at rates set by the government. That interest calculation, which the University does not actually charge or collect from you, will be reported as taxable income on your W-2 form and will be subject to standard federal, state and social security tax withholdings for each year that the loan balance is more than $10,000 on Dec. 31 of that year. The imputed interest will appear on your paycheck as “Interest” under the Federally Taxable Benefits section.

By way of example only, for a $15,000 loan in which one-fifth of the loan is forgiven each year, interest will be imputed for only the first two years of the loan — the year in which the loan is disbursed when the loan balance is $15,000 (interest is imputed on $5,000); and the next year when the loan balance as of December 31 of that year is $12,000 (interest is imputed on $2,000).

Formula: (Initial Loan Amount * IRS Blended Interest Rate for the calendar year) + # of months.

• Blended Interest Rate
• Calculate Your Imputed Interest [.xlsb]

If your employment is terminated either voluntarily or involuntarily, the remaining balance of the loan will become due in no more than six months from your termination.

If your position is eliminated and you are laid off, the remainder of your loan will be forgiven.

If your employment ends because of death or permanent disability for which you are collecting periodic income benefits from Drexel University's long term disability plan, Drexel University will forgive the balance of your loan.

If you are on an approved paid leave, the loan will continue to be forgiven. However, if you are on unpaid leave for more than 180 days, forgiveness of the loan is “suspended” during your leave period. In other words, the loan will not be reduced or “forgiven” over the time period of the unpaid leave. If you do not return to work within one year, the remaining balance of the loan will become due within 180 days. If you return, the forgiveness of the loan begins again in the month following your active return to work. Any time that you were out on unpaid leave will be added to the end of the original loan period.

No. Drexel University forgives the outstanding balance upon the death of the employee.

Once you are approved for the loan, Human Resources will provide you with the paperwork necessary for Drexel to make a check payable to the mortgage lender or the settlement agency that will be conducting your closing. It is your responsibility to complete these forms accurately and return them to Human Resources at least three weeks prior to your scheduled closing date.

No. You are encouraged to shop around and obtain vendors that meet your very specific needs.

Title insurance provides homebuyers and lenders with vital protection against losses arising from certain title issues that are undiscoverable from public records--including forgery, fraud and liens--which might limit a homeowner's use and enjoyment of their property.

There are two types of insurance: owner's title insurance, called an Owner's Policy, and lender's title insurance, called a Loan Policy. Most lenders require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases as you pay down your loan and eventually disappears as the loan is paid off.

An Owner's Policy is usually issued in the amount of the real estate purchase price. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner's Policy protects the buyer should a covered title problem arise. Possible hidden title problems can include:

• Errors or omission in deeds
• Mistakes in examining records
• Forgery
• Undisclosed heirs
• Others claiming an interest in your property

An Owner's Policy provides assurance that your title insurance company will stand behind you--monetarily and with legal defense, if needed--if a covered title problem arises after you buy your home.

Buying a home could be the largest single investment most of us will ever make. To minimize unpleasant surprises and unexpected difficulties, you’ll want to learn as much as you can about the newly constructed or existing house before you buy it. A home inspection may identify the need for major repairs or builder oversights, as well as the need for maintenance to keep it in good shape. After the inspection, you will know more about the house, which will allow you to make decisions with confidence.

You will be eligible to receive one home purchase assistance loan and one renovation loan during your time as a full-time or part-time benefits-eligible employee. These loans cannot be used concurrently. You must wait until full forgiveness of one loan (renovation or home purchase) before beginning the other loan program.

If you are currently on a performance improvement plan, we advise you to wait until you have completed your performance improvement plan before applying for this benefit. If you decide to receive this benefit while on a performance improvement plan and your employment at Drexel University ends, you may have to repay the remaining portion of the loan.

If you are currently on a one-year, three-year or other time-limited contract, we advise you to wait until you are hired permanently before applying for this benefit. If you decide to receive this benefit while on a time-limited contract, you will be accepting the possibility of repaying the remaining portion of the loan in the event that your contract is not renewed.

The property must be owner-occupied and remain the employee's principal residence for at least two years. Should the property at any time during the two-year period cease to be owner occupied and the employee's principal residence, or if the employee is no longer a benefits-eligible full-time or part-time employee of Drexel University during the two-year term, the employee agrees to pay the full amount of funds not yet forgiven back to the University.

The renovation loan covers up to $5,000 in improvements or repairs to your home. See the list in "What can I use the renovation loan benefit for?" for examples of eligible renovations. If your repair is over $5,000, we will match dollar for dollar any additional funds up to $2,500.

For example, if your repair is valued at $8,000, we would provide $5,000 plus $1,500 (half of the remaining balance of the renovation), provided that you will put in $1,500 of your own money towards the renovation.

You may use the renovation loan funds for any renovation that adds value to the house. Examples include:

• Asbestos Removal
• Carpeting
• Electrical
• Energy Audit and Necessary Improvements (Insulation, Windows, Mold Removal, etc.)
• External Improvements
• Flooring
• Heating/Cooling
• Plumbing
• Roofing

Your first step is to reach out to the Home Purchase Program Administrator. You will then need to follow the following steps to receive your funds:

1. Schedule a call with the Home Purchase Program Administrator to discuss the Renovation program and the process for receiving this loan and receiving forgiveness of the loan.
2. Send the Home Purchase Program Administrator “before” photos of the area where the renovation will take place.
3. Obtain and send three quotes from licensed and insured contractors for the renovation to the Home Purchase Program Administrator.
4. In partnership with the Home Purchase Program Administrator, select a contractor to provide the services for the Renovation.
5. Sign the Home Purchase Renovation Loan Agreement.
6. The check will be sent directly to your home.
7. To complete the loan forgiveness process, please send “after” photos to the Home Purchase Program Administrator.

Once you are approved for the loan, Human Resources will provide you with a check or direct deposit for the amount of the renovation loan matching the quote you provide.

The first half of the renovation loan is forgiven one year from the date we issued your check towards the cost of the renovation. The second half of the renovation loan is forgiven two years from the date we issued your check towards the cost of the renovation.

Yes. This benefit is taxable. You will be taxed on the forgiven amount as income.

If your employment is terminated either voluntarily or involuntarily, the remaining balance of the loan will become due in no more than six months from your termination.

If your position is eliminated and you are laid off, the remainder of your loan will be forgiven.

If your employment ends because of death or permanent disability for which you are collecting periodic income benefits from Drexel University's long term disability plan, Drexel University will forgive the balance of your loan.

If you are on an approved paid leave, the loan will continue to be forgiven. However, if you are on unpaid leave for more than 180 days, forgiveness of the loan is “suspended” during your leave period. In other words, the loan will not be reduced or “forgiven” over the time period of the unpaid leave. If you do not return to work within one year, the remaining balance of the loan will become due within 180 days. If you return, the forgiveness of the loan begins again in the month following your active return to work. Any time that you were out on unpaid leave will be added to the end of the original loan period.

No. Drexel University forgives the outstanding balance upon the death of the employee.