First-time home buyer grants Illinois

First time home buyer government programs Illinois First-time home buyers in Illinois are lucky in various ways. This is because they can access a lot of assistance, grant programs, special mortgages, help from counselors and even educational courses to guide them and navigate the complex process of buying a house in the state. A lot of buyers can receive cash grants, interest-free loans, down payment and closing cost assistance to reduce their burden.

The average median property sale price in this state till August 2023 was $280,400. This figure represents a whopping 6.2% rise from the previous as per an Illinois realtor survey. Thankfully, a lot of incentives and home buyer assistance programs are available to eligible first-time home buyers that helped them to turn their home ownership dream into reality.

Also read: Illinois Section 8 program for low income families

What Are The Eligibility Requirements And Documents Required To Qualify For Illinois Home Buying Programs?

The eligibility criteria to qualify for the first time home buyer assistance program may differ depending on your location and the type of program you are applying, however the minimum eligibility criteria require the following.

• Should have a credit score of medium 640
• The debt to income ratio should not exceed 45%
• The household income should fall below the income threshold set by the first-time home buyer program
• Must get their first mortgage through the Illinois Housing Development Authority.
• Must undergo a home buyer education course
• The lender should be approved by the home buyer program.

Following is the list of documents that you need to produce before the authorities governing the first-time home buyer programs in Illinois.

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• State government-issued photo IDs, original birth certificates, school registration, passport, driver’s license
• Proof of United States’ citizenship, documents proving they are a resident of Illinois or eligible immigration documents
• Employment information and income verification documents like pay stubs, tax returns, wage and bank account statements

How To Apply For Illinois First-Time Home Buyer Program?

If you are a first-time home buyer in the state of Illinois and think you are eligible to fulfill the aforementioned eligibility criteria then you can take the below-mentioned steps to apply for assistance programs.

• Find A Lender Approved By Illinois Housing Development Authority

First-time Illinois home buyers who want to qualify for the down payment and closing cost assistance program should find a lender approved by the Illinois Housing Development Authority. They can use the official IHDA mortgage website to locate a lender in their respective county.

• Getting Prequalified For A Mortgage

The next step is to get pre-qualified for a mortgage with an approved loan officer. This will help you to understand how much amount you can borrow for your first home. This will also help you to understand how much the mortgage will eventually cost for instance the fees of the lenders.

Based on your price range and financial paperwork the loan officer will help you to understand the first-time home buyer program you can qualify for.

• Take A Home Ownership Education Program

You need to undergo a home ownership course or program that meets the standards of the Department of Housing and Urban Development or undergo National Industry Standards for Homeownership Education and Counseling.

• Shop For A Home That Meets Your Needs

Once you’re pre-qualified for a loan you can search for a real estate agent who can help you to find a home within your price range and preference. They can also negotiate the offer price and get the property inspected and even set an appraisal if your offer is accepted.

• Apply For Illinois Mortgage And Down Payment Assistance Program 

The first-time home buyer programs set by Illinois Housing Development Authority have different eligibility criteria for repayment. Similar to a mortgage your personal and financial information will be submitted to an underwriter to ensure you can qualify for the mortgage and then you can qualify for the down payment and closing costs assistance program.

Recommended: First Time Home Buyer Grants in Texas

What Are The Available Illinois Programs For First-Time Homebuyers?

A lot of Government First-Time Home Buyer Programs and assistance are designed in the state of Illinois to assist low to moderate-income home buyers to help them with closing costs and down payment. The participants of the program have to meet certain requirements concerning debt-to-income ratio, credit scores and income to qualify.

Generally, the property should be the primary residence of the buyer and the overall cost can be capped. They are also required to undergo a homebuyer education program. A lot of options are available for first-time home buyers in Illinois through the Illinois Housing Development Authority in the following ways.

IHDA Access Forgivable

The program is available statewide. You can gain assistance up to 4% of the property purchase price or $6000 for closing costs and a down payment. The assistance comes in the form of a 10-year forgivable second mortgage.

Following are the eligibility criteria and benefits of this program.

• This home buyer program is available to repeat as well as first-time home buyers.
• Applicants should have a credit score of 640 to qualify
• Borrowers need to contribute around $1000 or at least 1% of the home purchase price whichever is higher
• Must complete home buyer education course
• Both new and existing construction homes can qualify
• Purchase price limits and household income should be within the program guidelines and are based on your location

IHDA Access Deferred

The program is available statewide and the assistance amount is up to 5% of the home purchase price or $7500 for closing costs and down payment assistance. The assistance comes in the form of a deferred interest-free second loan.

Following are the eligibility criteria and the benefits of applying for this home buyer program in Illinois.

• Available to first-time as well as repeat Illinois home buyers
• Should complete a homeownership education program or course
• Must have a credit score of at least 640
• Both new and existing constructed homes are eligible
• Borrowers must contribute $1000 or an overall 1% of the home purchase price whichever is higher
• The household income of the applicant including the purchase price limits should be within program guidelines and are based on your location.

IHDA Access Repayable

IHDA Access Repayable offers a 30-year fixed-rate mortgage along with an interest-free second loan that home buyers can use towards their closing costs and down payment. This home loan can be repaid in monthly installments over 10 years. There are several loan options available for borrowers such as USDA, VA and Fannie Mae HFA Preferred Loans.

The program is available statewide and provides assistance up to 10% of the home purchase price and $10,000 for closing cost and down payment. The assistance comes in the form of interest-free second loan which can be repaid for 10 years in monthly installments.

Following are the eligibility criterion and  benefits of Illinois home buyer assistance program.

• The program is available to first-time as well as repeat Illinois home buyers
• The program requires a minimum credit score of 640
• Borrowers need to contribute around $1000 or around 1% of the home purchase price whichever is higher
• Should complete a homebuyer education course
• The family income and the purchase price limit should be within program guidelines and based on the borrower’s location
• Both existing as well as newly constructed homes are eligible

Illinois State Treasurer’s Office Finally Home

The Illinois State Treasurer’s Office administers and manages The Finally Home Program in Illinois to assist first-time home buyers who are facing difficulty in qualifying for conventional mortgages either due to higher debt-to-income ratio requirements or because of their damaged or limited credit school.

The program provides a 5-year, 10-percent mortgage guarantee to approved lenders.  Following are the qualifications of applying to the program.

• Must be unable to meet the rules and guidelines of conventional mortgage lender
• Borrowers should contribute a minimum of 3.5% of the home purchase price towards their down payment cost
• The home purchase price should not exceed the conforming loan limitation set by Fannie Mae
• The income of the borrower should be less than 150% of HUD’s median family income for their area of residence.

To apply for the program you need be look for lenders participating in the Final Home Program and in case you need assistance to find a lender you can email finally [email protected] or dial 864-587-327.

• Federal Home Loan Bank Of Chicago Down Payment Plus

Two closing costs and a down payment assistance program are provided to qualified Illinois borrowers by the Federal Home Loan Bank of Chicago IL. The program provides eligible customers of the Federal Home Loan Bank of Chicago with a matching grant which is forgiven every month over a five-year time.

The program is available statewide via participating lenders of the Federal Home Loan Bank of Chicago. The maximum assistance is 25% of the first mortgage amount or $6000 whichever is less. The eligibility criteria and the benefits to qualify for this Illinois home buyer assistance program are as follows.

• Borrowers must contribute a minimum of $1000 towards their home purchase price
• Easy to access closing cost and down payment assistance
• Should come with an executed home purchase contract
• Must apply for first mortgage financing with an approved Chicago bank member
• Grants provided on a first-come first-served basis
• Should complete home buyer counseling and pre purchase homebuyer education program
• Should give proof of household income.

Federal Home Loan Bank Of Chicago Down Payment Plus Advantage

The Federal Home Loan Bank of Chicago Down Payment Plus Advantage is quite similar to the above Down Payment Plus Program with the grant limited to borrowers who are participating in the homeownership program funded by a nonprofit organization that offers direct mortgage financing. To apply, look for nonprofit organizations that have partnered with the Federal Home Loan Bank of Chicago.

Grants are forgivable every month over five years. The maximum amount of assistance is 25% of the first mortgage amount or $6000 whichever is less. You can participate in non profit organizations like Habitat for Humanity to obtain first mortgage financing.

The eligibility criterion and the benefits of applying for this first-time home buyer program in Illinois are as follows.

• Should contribute a minimum of $1000 towards home purchase price
• Should complete home counseling as well as pre-purchase home buying education course
• Should provide an executed home purchase contract
• Must apply for first mortgage finance with a participating nonprofit organization
• Should provide proof of household income to qualify

What Are The Federal First-Time Home Buyer Assistance Programs In Illinois?

Following is the list of national first-time home buyer assistance programs that are available throughout the United States of America including the state of Illinois. By becoming eligible for the following resources you can easily get a home in Illinois.

• VA loans

The US Department of Veterans Affairs (VA) assists veterans, military service members as well eligible surviving spouses to purchase homes in any state of America including the state of Illinois.

The loans are generous and offer competitive interest rates without any requirement for paying mortgage insurance or down payment. Even though there are no official credit score requirements a lot of VA-approved lenders require borrowers to have a credit score of 640.

• FHA loans

One of the best and the most go-to programs for first-time home buyers in the United States is FHA Loans which assists borrowers who fail to qualify for conventional loans because of their low credit scores or damaged credit history.

They are best known for low down payment and low credit score requirements. The Federal Housing Administration requires a down payment as low as 3.5% for borrowers having a credit score of 580 or above.

On the other hand borrowers with credit scores as low as 500 have to put 10% down payment. They are required to pay mortgage insurance for the life of the loan which cannot be canceled.

• USDA loans

A zero down payment mortgage provided by the U.S. Department Of Agriculture is known as a USDA loan for eligible home buyers belonging to rural and suburban America. The loan is well known for first-time rural home buyers and for requiring a low down payment.

The income limitation of the program may vary depending on your location. Candidates with a credit score of 640 or above can get streamlined processing. Individuals with low credit scores have to go through stringent underwriting standards.

• Fannie Mae And Freddie Mac Conventional Mortgages

Conventional mortgages refer to those loan that are not insured or guaranteed by the federal government. They conform to the rules and requirements set by Freddie Mac and Freddie Mac and enable down payments as low as 3% for first-time home buyers or those who are low-income earners.

Unlike other mortgages, the conventional loan enables borrowers to cancel the mortgage insurance or avoid paying mortgage insurance altogether if they can put around 20% down payment. They are best for limited mortgage insurance premiums and low down payment.

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Illinois Statewide And Regional Resources For First-Time Home Buyers

• Housing Counseling Agencies  

Illinois first-time home buyers can contact a HUD-participating housing counseling agency to avail low-cost or free counseling services for purchasing, selling, renting, credit issues for foreclosures and reverse mortgages.

• Illinois Housing Development Authority

The Illinois Housing Development Authority assists first-time home buyers through repair grants, supportive multifamily renting housing and community building programs, foreclosure prevention assistance and affordable mortgage.

• HUD Home Investment Partnership Program

A lot of Illinois communities are utilizing the Home Investment Partnership program funded by HUD that assists them with first-time home buyer programs and reduces their housing and financial burden.

• SmartBuy Program

The program offers student loan relief and down payment assistance to assist first-time homebuyers in purchasing a property in Illinois.

• Illinois Department Of Commerce And Economic Opportunity

This resource provides tons of housing assistance and first-time home buyer programs to qualified home buyers.

Some more options include –

• Illinois Housing Search Housing Resources
• Illinois Assist Homeownership Program
• Housing Action Illinois

Local Illinois Home Buyer Resources

• City of Alton’s Homeownership Program (Alton)

People who want to buy a home in Alton will get the five years forgivable loan. This loan they will get for the down payment and closing costs. If any buyer fulfills all the requirements of the loan, along with the “very low-income”, they will get help up to $5,000.

• Madison County HOMEbuyer Program (Madison County)

If you want to buy a home in Madison County, then the Madison County Community Development Department offers a forgivable loan for five years. You will get financial help up to $5,000, so you can pay for the down payment and closing costs. This program gives help to households who are low-income to moderate-income.

• NeighborhoodLIFT (Cook County)

If someone wants to buy a home in Cook County then they will get the NeighborhoodLIFT down payment assistance program. This is a national assistance program which is offered by the Wells Fargo Housing Foundation and Neighborworks of America. The qualified home buyers will get a grant of up to $17,500 from the program.

• Chicago Home Buyer Assistance Program (Chicago)

When you want to buy a home in Chicago and need financial assistance then you can apply for the Chicago Homebuyer assistance program. But when you apply for this assistance program then you have to take the 8-hour homebuyer education course. The city of Chicago offers the help of up to 7% to pay for the closing costs and a down payment of the main amount.

• Kane County First-Time Homebuyer Loan Program (Kane County)

From this loan program, first-time home buyers will get the assistance of up to $10,000 to pay for the down payments and closing costs. The grant is given to people with an interest-free loan. For getting the benefit from this grant program, the buyer has to contribute at least 1% of the down payment, and also complete the homebuyer education course.

• Kankakee Homebuyer Incentive Program (Kankakee)

The homebuyers who buy the home within the Kankakee city limits will get the assistance of $2,500. The grants are only for the low to moderate-income families or households, who are buying homes within low to moderate-income census tracts.

• AHC Down Payment Assistance (Lake County)

From the Affordable Housing Corporation of Lake County, first-time homebuyers will get the down payment assistance of up to 5% of the purchase price of the home. For receiving this assistance, the applicants need to complete the homebuyer education course and counseling. The help is given to the homebuyers in the form of a no-interest loan with no-monthly payments.

• Homebuyer Assistance Program (Rockford)

If you buy the house in Rockford city, then you will get assistance up to $14,999. But this assistance you will get when you buy the house in the Rockford city limits. The homebuyers in Rockford have to live in the house for at least 6 years to get the benefit of the assistance program. Along with all those things, the buyers have to pay a minimum of $250 for the cost of the home.

Conclusion

Being an Illinois first-time home buyer during a hot market can be challenging and daunting however qualifying for any one of the above home buyer programs or federally designed programs will help you to reduce the cost. First-time home buyers in Illinois can apply for lots of generous programs to turn their home ownership dream into reality. The Illinois Housing Development Authority provides a lot of down payment assistance programs for repeat as well as first-time home buyers. The programs are available for 2 to 4-unit properties, single-family homes, approved condos, manufactured homes, planned unit developments and townhomes.