Investing in real estate is on an upward trend. So, if you're a first-time buyer considering investing in property for the first time, consider homes in Illinois. Admittedly, mortgage and loan processes can be quite intimidating due to aspects like purchase price limit, mortgage options, and conventional loans among others.
With eligibility requirements, insurance, down payments, and closing costs in mind, you should consider first-time homebuyer programs and payment assistance programs to help make purchasing a new home much easier. First-time homebuyer grants are particularly helpful for first-time homebuyers in easing the monthly mortgage payments.
In this article, learn more about these first-time homebuyer programs in Illinois and how they work to provide competitive interest rates and more.
How First-Time Home Buyer Grants Illinois Work
Getting into a first-time homebuyer program in Illinois is quite similar to any other homeownership assistance program. You must be prepared with the paperwork, especially those proving you meet the income level and household size eligibility criteria. Whether it is for down payment assistance or full mortgage payments, here is the general process you should know.
1. Look For An IHDA Lender
The first thing you have to do is to check the Illinois Housing Development Authority (IHDA) for their authorized list of partners. These lending agencies are the only ones permitted to originate IHDA loans and down payment programs.
2. Check Your Prequalification
Once you select an agency, the loan officer will require you to submit your mortgage application to see which mortgage programs you are eligible for, the mortgage rates for your classifications, and the fees you may be required to settle. This process may involve asking for your credit report and checking your debt-to-income ratio.
At this point, you may talk to various mortgage companies and choose to compare their various homebuyer program loan options until you find the best mortgage product for your needs.
3. Take A Homebuyer Education Course
Next, the IHDA requires a housing counseling course before you can close the home of your dreams. To move forward, you should ensure that the course from the housing authority counselors meets the standards set by the Department of Housing and Urban Development (HUD) or the National Industry Standards for Homeownership Education and Counseling.
4. Find Your Desired Home
Individuals who gain approval will get a prequalification letter that they can use to shop for a home. However, the house must meet the qualified purchase price limit for better chances of approval, ensuring purchase accessibility.
In this process, first-time homebuyers and their families can work with a realtor for assistance in putting in offers, negotiating with sellers, inspecting the houses and communities, and appraising the residence.
5. Complete A Loan Application
Once they have decided on the property to buy and created a contract to purchase, the next step is finishing the application and sending it to underwriting. Here, there will be another review of the borrower qualification, including ensuring that the credit qualifications and income requirements are met.
6. Close On The Home Loan
Finally, the only thing left is to settle closing costs, sign the necessary documents, and get the keys to the new home. This is an exciting step toward building household wealth through homeownership.
Different First-Time Home Buyer Grants Illinois
First-time homebuyers in Illinois get access to programs that aid them through down payment or closing cost assistance. These programs are mainly for low-income borrowers to moderate-income borrowers looking to buy their primary residence. Federal government-backed homebuyer programs offer mortgage financing that caters to various income limits.
Here are the primary options available for first-time homebuyers in the state of Illinois:
IHDAccess Forgivable
The IHDA Access Forgivable program is a statewide program that offers qualified home buyers a 30-year fixed-rate mortgage and a second forgivable loan to pay for down payments, closing costs, or both. Annual mortgage considerations are part of the financial situation assessment for eligibility.
Qualified participants of this program may use this benefit in various mortgage loans, including USDA, VA, and FHA loans which are backed by the Federal Housing Administration. Some of the essential details of this program are:
- The assistance amount is 4% of the purchase price, up to $6,000
- Borrowers must complete a homeownership education course
- The minimum credit score is 640
- The properties eligible include single-family homes that are either new construction or existing homes
- The properties eligible include new construction or existing homes
- Borrowers must contribute $1,000 or 1% of the purchase price, whichever is greater
IHDAccess Deferred
With a similar loan process to IHDAccess Forgivable, IHDAccess Deferred also offers a 30-year fixed-rate mortgage with down payment assistance. However, this mortgage loan is interest-free throughout the life of the mortgage. The borrower will not be required to repay the second loan until the home is sold, refinanced, or paid off.
If someone qualifies for the IHDAccess Deferred, they can choose from FHA, VA, USDA, and Fannie Mae HFA Preferred loans, which are types of conventional mortgage options. Some of the essential details of this program are:
- The assistance amount is 5% of the home’s purchase price, up to $7,500
- Borrowers must complete a homeownership education course
- The minimum credit score is 640
- The properties eligible include single-family homes that are either new construction or existing homes
- Borrowers must contribute $1,000 or 1% of the purchase price, whichever is greater
1stHomeIllinois
1stHomeIllinois is a state grant that offers $7,500 to purchase property in Cook, Marion, St. Clair, and Winnebago counties. This program exclusively benefits first-time homebuyers or people who have not owned a home in the past three years. The amount may be used for down payment requirements or closing costs, aiding in the buying process.
Downpayment Plus And Downpayment Plus Advantage
The Federal Home Loan Bank of Chicago offers up to $6,000 in down payment and closing-cost assistance through the Downpayment Plus And Downpayment Plus Advantage. To avail of this program, the buyers must apply for a home loan with a member of FHLB Chicago or a non-profit organization. This is part of additional assistance provided to aid in home purchasing.
Move Into Your First Home In Illinois Today!
If you want to purchase a house but need financial support to cover some of the costs, first-time homebuyer grants Illinois might provide the boost you need. Agencies and local governments scattered across the state offer financial assistance, so research resources to find the best one for your home purchase.
Considering different states for your first home? Don't miss our recent blog post on first-time homebuyer grants in Texas. Compare your options and make the best decision for your future.
Aside from these grants, check out our list of available first-time homebuyer assistance programs in Illinois.
