Illinois First Time Homebuyer Programs GUIDE [2021] | How to Get IL Homebuyer Assistance {data, programs, tips, etc}

Are you interested in buying a house in Illinois? As a first-time homebuyer, you face many hurdles. The median home price in Illinois is $295,000, already above the national average, but the average list price is $335,000 in Chicago and $540,000 in Naperville!

The down payment and closing costs needed to buy a house are major barriers to homeownership, but hidden homeownership costs and access to credit can also pose significant challenges.

Fortunately, there are many first time homebuyer programs in Illinois that put homeownership within reach. Here’s a guide to the tax credits, first-time buyer loans, grants, and down payment assistance programs you can qualify for as an Illinois first time home buyer.

First Time Homebuyer Loans in Illinois

Qualifying for a mortgage is one of many challenges you face as a first-time buyer. If you have low to moderate income, bad credit, debt, or need help with your down payment, a first time homebuyer loan in Illinois is a good place to start.

Illinois Housing Development Authority (IHDA) | IHDA Mortgage

The IHDA Mortgage program offers affordable, fixed-rate mortgages to first-time and non-first-time buyers in all Illinois counties. There are several IHDA loan programs available through approved lenders that combine a 30-year, fixed rate mortgage with down payment assistance.

All IHDA loans have some general requirements:

  • Meet income and purchase price limits
  • Have a credit score of at least 640
  • Use the home as a primary residence
  • Contribute 1% or $1,000 of the purchase price
  • Complete a homebuyer education course online or in person

You can learn more about the Illinois down payment assistance programs from IHDA in the next section.

 

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Illinois State Treasurer’s Office | Finally Home

The Finally Home program is offered by the Illinois State Treasurer’s Office to guarantee up to 10% of a mortgage (for five years) in partnership with eligible lenders. This program is designed for lower to middle-income families buying or refinancing a home who fall just short of the lender’s guidelines.

There are several qualifications you must meet:

  • Be an Illinois resident and taxpayer
  • Buying or refinancing a home in Illinois
  • The 10% guarantee cannot be used for closing costs
  • You must contribute at least 3.5% toward a down payment
  • Meet income and housing limits
  • Fall just short of the lender’s requirements due to poor credit, a high debt-to-income ratio, or other factors

Nationwide Mortgage Options for First Time Buyers

  • USDA Loans
    • Primarily for rural and suburban properties, this loan program offers low to zero down payment mortgages and allows rent and utility payments in place of more traditional credit history. Many areas of Illinois qualify for a USDA loan.
  • FHA Loans
    • This program adjusts itself to try and assist with low credit scores or low down payments; unfortunately, it does not work great with both. Your credit score can be as low as 500, but you will need at least a 10% down payment. As your credit score goes up, your down payment can go as low as 3.5%. Mortgage insurance is required for the entire duration of the loan.
  • VA Loans
    • This program is available to all active military members, veterans, and military spouses. The qualifications are straightforward and allow military members to qualify with no down payment and no mortgage insurance.
  • Fannie Mae HomeReady
    • With a reasonably standard credit score requirement, you are allowed a down payment as low as 3% and a lot of flexibility on the origin of those funds.
  • Freddie Mac HomeOne
    • This program works very similarly to the Fannie Mae HomeReady program. It can reduce your down payment requirement to as low as 3% if you have a reasonably standard credit score for a mortgage.

First Time Home Buyer Tax Credits & Down Payment Assistance in Illinois

Struggling to come up with the down payment you need? What about closing costs? These down payment assistance programs in Illinois offer grants or forgivable loans to help!

Illinois Housing Development Authority | IHDA Down Payment Assistance

The IHDA is the largest provider of down payment assistance in Illinois. The housing authority offers a variety of home loans designed to meet the specific needs of first-time home buyers in Illinois and are paired with down payment and closing cost assistance.

Here is a quick overview of the different programs available.

 

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Opening Doors

  • Up to $6,000 in down payment and closing cost assistance
  • Grant is forgiven after 5 years
  • DACA Recipients are eligible
  • Only available with FHA, VA, USDA Preferred, FNMA Preferred, or FHLMC IHFA Advantage loans

IHDAccess Forgivable

  • Up to $6,000 or 4% of the purchase price toward closing costs or a down payment
  • Grant is forgiven after 10 years
  • Available with all mortgage programs

IHDAccess Deferred

  • Up to $7,500 or 5% of the purchase price for closing costs or the down payment
  • Interest-free loan that is deferred for the life of the mortgage
  • Repayment required upon mortgage pay-off, refinance, or sale of the home
  • Available with all mortgage programs

IHDAccess Repayable

  • Up to $10,000 or 10% of the purchase price for down payment and closing cost assistance
  • Interest-free loan repaid monthly over 10 years
  • Available with all mortgage programs

Federal Home Loan Bank of Chicago | Downpayment Plus Programs

The Federal Home Loan Bank of Chicago offers down payment assistance in Illinois through FHLBank of Chicago members/lenders. There are two programs available, both of which provide down payment and closing cost assistance to borrowers. One is a matching program that provides a forgivable grant. These are some of the best first time home buyer grants in Illinois outside the Chicago area!

Downpayment Plus (DPP):

  • Matching program providing a closing cost and down payment grant
  • Grant is up to $6,000, 25% of the mortgage amount, or 3x the borrower’s contribution
  • Borrowers must be income-eligible
  • Grant is forgiven on a monthly basis over five years
  • Must complete homebuyer education and counseling

Downpayment Plus Advantage (DPP Advantage):

  • Provides a grant of up to $6,000 forgiven over five years
  • Available through nonprofits that provide direct first mortgage financing like Habitat for Humanity
  • Must complete homebuyer education and counseling

First Time Homebuyer Programs in Cook County, IL

Are you buying a house in Chicago or surrounding areas of Cook County? You’ll find a huge variety of first time homebuyer programs in Chicago and county-wide including closing cost and down payment assistance, tax credits, and even appraisal gaps!

Wintrust Bank | Homebuyers Assistance Program

This Illinois down payment assistance program is designed for first-time buyers and non-first-time buyers. The amount granted is three times the home buyer’s contribution, which is one of the requirements for the program. However, the grant is forgiven after five years, meaning that you will not have to pay it back if you stay in your home for at least five years.

Requirements:

  • A minimum credit score of 620
  • For first-time homebuyers, you will need to complete a homebuyer education course.
  • The home must be located within Cook County, excluding the City of Chicago.
  • Must be the borrower’s primary residence.

City of Chicago | Neighborhood Lending Program

This program from the City of Chicago offers assistance with down payments and closing costs as well as home affordability and lead-based paint removal. First and second mortgage loans are provided for the purchase or rehab of single-family and multi-unit homes. Additionally, these loans are either deferred or completely forgivable, depending on the circumstances.

Along with down payment and closing cost assistance, the program, in partnership with nonprofit Neighborhood Lending Services, offers first time homebuyers affordable 30-year fixed mortgages that require a down payment of just 3%.

Eligibility is decided based on gross annual household income by the NHS.

City of Chicago | TaxSmart

This mortgage credit certificate (MCC) program provides a federal tax credit to qualified home buyers based on mortgage interest paid per year. The current rates are 25% for a home purchase or 50% for a home improvement/rehab capped at $2,000 annually.

This valuable Illinois first time home buyer tax credit means you can save up to $2,000 on your taxes every year for as long as you have your mortgage!

You must meet basic requirements for a mortgage credit certificate in Chicago:

  • Be a first-time homebuyer or purchasing in a target area in the City of Chicago
  • Meet income guidelines based on the home size and whether it is a targeted or non-targeted area
  • Meet the purchase price limit based on target or non-target area and new or existing construction
  • Must use the home as your primary residence

City of Chicago | Building Homes & Affordable Homes Program

This program exists to fill the appraisal gap, or the difference between the sales price and it’s appraised value by the lender. This assistance is available in targeted neighborhoods of Englewood Square, North & South Lawndale, Humboldt/Garfield Park, and Woodlawn. Up to $60,000 is provided. If the appraisal gap is less than $60,000, the remaining amount can be used for closing costs, down payment, and more!

To qualify, you must meet certain requirements.

  • The home must be in a targeted area and built through the City Lots for Working Families program
  • Household income cannot exceed 140% of the area median income.
  • The buyer must use the residence as their primary residence for a minimum of 10 years, or the home must be sold to an income-qualified buyer

FAQs for Illinois First Time Homebuyer Programs

Who is considered a first-time homebuyer in Illinois?

In Illinois, you are generally considered a first-time homebuyer if you have not owned a home in the last three years. You may also be considered a first-time buyer if you recently owned a home with a former spouse but you are a displaced homemaker or have kids.

What programs are available for first-time homebuyers in Illinois?

There are multiple first-time homebuyer programs in Illinois such as TaxSmart, Neighborhood Lending Program, and the Home Buyers Assistance Program plus options through the Illinois Housing Development Authority itself. You can qualify for tax credits, down payment and closing cost assistance, first-time buyer loans, and even grants to cover an appraisal gap.

Are first-time homebuyer programs worth it?

Every first-time homebuyer program in Illinois offers a great value and makes homeownership more accessible. If you can qualify and you plan to stay in the home long enough (if it’s a repayable grant), it’s absolutely worth it to jump through a few hoops for assistance.

Are you ready for the thrilling adventure of buying your first home? With these first time homebuyer programs in IL, it’s easier and more affordable to realize the dream of homeownership. Once you’ve started the house hunting process, give the friendly movers at Federal Companies a call to discuss your upcoming relocation. We will be here to help with a stress-free moving day!

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