Individual Development Accounts An overview of Individual Development Accounts (IDA), also known as, matched savings plans.

What is an Individual Development Account (IDA)?
An Individual Development Account (IDA) is a program that helps low and very low income households get in the habit of saving by matching each dollar the IDA participant saves with $1, $2, or sometimes even $3 of matching IDA grant funds.   That is the equivalent of getting a 100%, 200% or 300% return on your savings!  Once you have competed the program, these grant funds can be used to purchase a home of your own.

What are the benefits of getting an IDA?
Participating in an IDA program is a great way to getting in the habit of saving and to build an asset for you and your family. Here are some more benefits of participating in an IDA program:

  • Many programs allow you to use the funds for a down payment on a first home
  • The funds are typically treated as your own funds to help you meet your minimum investment
  • The IDA funds are usually a granted to you not loaned to you
  • Most programs allow your income to go up while you are participating in the program
  • IDA grant funds are compatible with most home loan and down payment assistance programs 
  • IDA programs are offered from local non-profits throughout the United States
  • The funds can often also be used to start or grow a business or to pursue education if you decide not to buy a home, but check with your local IDA program staff for details and restrictions

Who is eligible for an IDA?
To be eligible for an IDA program you will need to check with your local IDA program provider about their specific rules and requirements.  The following though, are some examples of typical requirements you are likely to see across the various programs:

  • You must meet the specific program’s income limits which vary from program to program, but typically the most any program would allow you to earn is 80% or less than the area median family income adjusted for size 
  • The IDA participant who is using the funds to buy a home will need to be a first-time homebuyer
  • IDA participants typically must complete homebuyer education course provided by a HUD certified housing counseling agency prior to closing on the home they are purchasing with IDA funds
  • Must make regular deposits into your IDA account on a monthly or more frequent basis as determined by your local program provider
  • Failure to meet the minimum savings requirements typically results in being disqualified from the program

How do IDA programs work?
To participate in a program you must find a local program that allows you to use the funds to buy a home.  You must apply for the program with that agency and meet all of their program requirements.  Once enrolled in the program you then must begin saving funds into your IDA savings account and the IDA program provider will begin matching your funds according to their program rules. It is common to have a minimum of six months of participation in the program prior to being eligible to buy a home and the maximum amount of time you can participate is typically three years. There will also be minimum and maximum savings and matching requirements which you will want to inquire about with your local program provider.  Remember it is typical that you will not have access to the funds you have saved in your IDA account unless you withdraw the funds to buy a home or you decide to discontinue your participation in the program.   It is also common that the total funds in your IDA account (your savings plus the matching IDA grant) will be paid directly to the closing agent at the time you buy your first home.   

Finding and Selecting a Local IDA Program
There are a growing number of non-profit organizations throughout the country who offer an IDA or Matched Savings Program.  Remember though, not all programs will allow you to use the funds to buy a home, so you need to check with your local program providers to see if they do and to learn about their program requirements.  You may also want to check and see if their particular program allows you to switch how you use the funds in case you decide you would rather use the funds to either start or grow a small business or to pursue additional education.  The Corporation for Enterprise Development (CFED) maintains a national IDA Resource Directory where you can search for a local IDA or Matched Savings program near you.