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Taking Advantage of Illinois Down-Payment Assistance Programs

Many people yearn to create a permanent home for their family but feel intimidated by the complexity and challenges of qualifying for a mortgage loan, coming up with funds for a down payment, and paying closing costs

However, there are several programs available to help potential buyers achieve their goals —  and an experienced, knowledgeable mortgage lender can help you explore your options and navigate the path to getting the home you’ve always wanted. 

These assistance programs can help make the dream of homeownership a reality by providing a financial boost to those with limited resources. Additionally, they can help lower closing costs, making the purchase of a home more affordable. Finally, taking advantage of these programs can build your credit and allow you to build equity, both benefits to your long-term wealth and future home purchases.

Let’s take a closer look at some of the mortgage and down payment assistance opportunities available to hopeful homeowners in the Chicagoland area, and throughout the state of Illinois. 

Financial Literacy and the IHDA

The Illinois Housing Development Authority (IHDA) offers homebuyer loans and down payment assistance for low and middle-income individuals and families across the entire state. 

These products feature interest rates that are often superior to other options and various types of assistance for qualified borrowers, and loans are available for both first-time and experienced buyers. Eligibility requirements include income and purchase price limits, as well as credit score and debt-to-income ratio requirements. 

Applicants must also take a (free, online) homebuyer education course. The IHDA provides highly trained counselors that are dedicated to improving financial literacy in our communities. 

Basic financial knowledge is crucial because it enables people to become more informed and responsible when it comes to managing their money wisely, creating a budget, understanding credit, saving for the future, and making good investments. 

This kind of valuable consumer education also helps individuals recognize the pitfalls of debt and identify signs of common scams and fraud.

Highlights and Requirements

IHDA’s Access Mortgage Programs deliver a variety of assistance to eligible consumers. It’s income-based and available to both first-time and repeat homebuyers. To qualify, interested parties must have an income at or IHDA “above-80% area median income limits (AMI) and complete the pre-purchase education course. The requirements are pretty generous – as of December 2022, home buyers making $125,040 or less can qualify.

Now let’s delve deeper into the 3 types of IHDAccess Mortgages:

  • Forgivable
  • Deferred
  • Repayable 

IHDAccess Forgivable is a mortgage down payment assistance program that does not need to be repaid unless you sell or refinance in the next 10 years. It pays up to $6,000, which can be used towards a down payment, closing costs, or both. 

This program works with conventional, VA, FHA, or USDA loan types as well as FNMA HFA Preferred and FHLMC HFA Advantage. You won’t have to make monthly payments, but you must occupy the home as your primary residence within 60 days of closing. 

To qualify for this assistance, you need a minimum credit score of 640, a contribution of 1% of the sales price or $1,000 (whichever is greater), and a DTI of 45% or lower. While these qualifiers may feel confusing here in print, your loan officer can help you translate with a quick conversation.

The IHDAccess Deferred Mortgage is similar but with a few main differences. It doesn’t need to be repaid for 30 years unless the home is sold or refinanced. You’ll receive 5% of the purchase price up to $7,500 in down payment assistance. This program has the same qualification guidelines as the Forgivable loan.  

Or buyers might choose to go with an IDHAccess Repayable loan. This zero-interest assistance loan offers 10% of the cost of the home, up to a maximum of $10,000. It’s repaid monthly over the course of 10 years and must be repaid in full if you sell or refinance the home during that time. 

What’s Right For You?

In addition to these programs, there are also other down payment assistance programs available through the Federal Housing Authority, local governments, and nonprofit organizations. 

The federal government has designated certain locations in the state of Illinois as “targeted areas,” where more homeowners are needed. If you’re interested in purchasing in one of these communities, the price and income limits for qualification will be less restrictive. If you love rural life, this might bring the dream of owning your own home closer to reality, along with a USDA Rural Development Loan

Certain municipalities and local entities also have mortgage and down payment programs, such as: 

There are also special programs available for teachers, first responders, service members, and Native American tribespeople

Find the Perfect Home

The overarching goals of down payment assistance and first-time home buyer programs are to give more people the opportunity to get a piece of the American dream by owning a home. 

Many Illinoisans have the drive and ability to make monthly mortgage payments but lack good credit history and a large stash of cash for the myriad costs associated with purchasing property. Thankfully, there are several different types of assistance programs available for those who qualify.

If you’re tired of landlords and renting and all of that hassle, now could be the ideal time to get your ducks in a row and apply for down payment or first-time home buyer assistance. 

While the process of getting your finances in order and completing applications can seem overwhelming, I’m here to help. I’ve got more than 16 years of experience in the Chicagoland real estate industry and can help you triumph over the challenges of qualifying for a mortgage and buying a home.

Let’s continue the conversation — reach out today!

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