No-interest, Fully Amortizing Loan (NIFAL) Program for Junior Faculty
The NIFAL is a program to further assist newly hired junior (untenured) faculty to purchase a primary residence in the local housing market.
The NIFAL will be secured by a mortgage on a “qualifying residence”.
Funds for the NIFAL program are the responsibility of the faculty member’s Department; so eligible faculty should contact his or her Department Head.
Eligibility
This program is available one-time only to all newly hired full-time, junior (untenured) faculty for up to four (4) years from their faculty hire date.
Note: Program allowances were updated, effective March 1, 2022.
Previous program allowances apply for faculty who received their NIFAL offers prior to March 1, 2022. Please see your offer letter for the specifics of your NIFAL amount.
Qualifying residence
Same as for the CIM-JF program and CIM-SF program.
Loan amount
$100,000.
Term
7 years. The mortgage will be for a period of 7 years and forgiven over this 7-year period.
Once the “forgiveness” has been completed, the mortgage will be discharged from the property.
Interest rate
- For newly hired faculty members who qualify as “relocation” under IRS guidelines, at the time of receiving the NIFAL, this mortgage will be interest free.
- For faculty members who do not qualify as “relocation” under IRS guidelines, at the time of receiving the NIFAL, interest is charged to the mortgage at the prevailing Annual Mid-Term AFR. The principal and interest are forgiven.
Both the forgiven principal and interest (if applicable) are considered to be taxable income and are added to the faculty member’s W-2 in the tax year it occurs. Any interest forgiven will also be reported as mortgage interest paid on a 1098 Mortgage Interest Form in the same tax year.
Monthly payments
There are no monthly payments, however the forgiveness will be reported to payroll on a monthly basis, beginning in the month after the NIFAL is funded.
The forgiveness of the NIFAL is considered by the IRS to be compensation. To lessen the tax burden, the forgiven amount is spread over a 7-year period with forgiveness divided equally and reported monthly on the faculty member’s pay statement.
Note: FICA (Social Security and Medicare Tax) will be withheld on this forgiven amount each month. However, federal and state tax will not be withheld and the faculty member will be responsible for any income tax liability related to this forgiven amount.
Termination
Any remaining balance of the NIFAL that has not been forgiven will become due on the earlier of:
- The date of sale of the mortgaged property.
- The date in which the property is no longer the faculty member’s principal residence.
- The date of termination of employment at MIT.