Purchasing a home is one of the biggest investments most people will ever make. Doing it for the first time can be incredibly nerve-wracking, but extremely fulfilling once you are able to move into your new house. As a first time home buyer in Illinois, there are a couple of government programs you can use in order to make the home purchasing process as simple as possible. Outside of these programs, there are a few other things you need to know when you are buying your first home.
1st Home Illinois
1st Home Illinois, which is offered through the Illinois Housing Development Authority (IHDA), is perhaps the most generous in-state program aimed at first time home buyers. The program offers first time homeowners, or people who have not owned a home in three years, the ability to secure up to $7,500 in down payment assistance. The money does need to be repaid over a period of 10 years, but at a 0% interest rate.
Requirements for 1st Home Illinois do not differ greatly from regular mortgage requirements with two very important exceptions: money brought to the table by the borrower and location. You only need to bring $1,000 to the table in order to purchase the a home. This is far below the 20% typical down payment for almost any house, and is even under the 3% down payment required by FHA or USDA loans. You will still be responsible for closing costs, but they can be rolled into your mortgage. The location requirement is fairly strict, as only houses in 10 counties are eligible for this program. Your home needs to be in one of the following counties in order to qualify for the 1st Home Illinois program: Boone, Cook, DeKalb, Fulton, Kane, Marion, McHenry, St. Clair, Will and Winnebago. This covers most of the Chicagoland area, and parts of the Metro St. Louis area, which contain a little over half of the state’s population.
Other basic requirements include a credit score of at least 660, a variable income requirement depending on where the home is located, mandatory owner-occupation, and the structure must already exist (no new construction). In addition, veterans are exempt from the requirement of being a first time home buyer, or not owning a home in the last three years.
@HomeIllinois
The @HomeIllinois program was created in order to make it easier for Illinois residents to purchase a home, regardless if they are a first time home buyer or not. Unlike 1st Home Illinois, there are no residency restrictions with the @HomeIllinois program. First time buyers are able to get up to $5,000 in down payment or closing cost assistance through the IHDA, which will be paid back as part of the mortgage over a period of 10 years at a 0% interest rate. This is a much better option than just rolling closing costs into a conventional mortgage, which will end up adding hundreds or thousands of dollars in interest payments. Using the $5,000 as part of your down payment will reduce the amount of money you need to borrow at your home loan interest rate of at least 3%.
Aside from the fact that you can live anywhere in the state and still qualify for @HomeIllinois, the basic requirements are similar to the 1st Home Illinois program, except that you do not have to be a first time home buyer, and the maximum amount of money you can receive is $5,000 as opposed to $7,500. The minimum credit score and maximum income requirements are the same, as well as the need for the home to be owner-occupied. Mandatory home ownership counseling was put into the program to ensure that you know what you are getting into during the home buying process, and to give you guidance on issues that might arise while you live in your house.
Both 1st Home Illinois and @HomeIllinois can be used in conjunction with federal institutions, such as FHA or USDA loan guarantee programs. While there may be slight location or down payment differences, being able to qualify for an Illinois program will almost always mean you can qualify for a federal program as well. This can substantially reduce the price of buying a home for the first time, especially if you are buying a residence under $250,000. These programs are designed to help the majority of first time buyers get into a home, even if you would not qualify for low income loans. With a high income threshold throughout most of the state, even if you could qualify for a regular mortgage, you can still save a lot of money by taking part in one of the state-sponsored programs.
Federal Government Programs for Illinois Residents
First time home buyers in Illinois can also participate in federal initiatives designed to help people new to home ownership, sometimes in conjunction with one of the above programs. FHA loans allow buyers to who may not otherwise qualify for a conventional mortgage obtain a home loan with as little as a 3.5% down payment. USDA Rural Development loans are available through local banks and cover about 90% of the state’s area. Just about any buyer looking to purchase a house located outside of Chicago and a handful of bigger towns is eligible to receive a loan for 100% of the purchase price. Under the USDA program there is a 2% fee rolled into the mortgage up front, and a .4% annual fee tacked onto your monthly payments for mortgage insurance. This rate is higher than private mortgage insurance, but the program can get you into a house if you cannot come up with a down payment.
2 Point Highlight
1st Home Illinois, which is offered through the Illinois Housing Development Authority (IHDA), is perhaps the most generous in-state program aimed at first time home buyers.
First time buyers are able to get up to $5,000 in down payment or closing cost assistance through the IHDA, which will be paid back as part of the mortgage over a period of 10 years at a 0% interest rate.
