Real estate trends seem to agree on one thing: upwards movement. Illinois–from Chicago to Marion to Quincy–is no exception. In the ever-increasing housing market, the average Illinois home jumped over $50,000 in value from 2020 to 2022.
When looking to buy your first home, the mortgage and loan process can feel intimidating, especially in Illinois’ hot housing market. Eligibility requirements, closing costs, insurance, down payments–how does a first-time homebuyer navigate the market and secure a mortgage?
First-time homebuyer programs offer relief in Illinois, helping make purchasing your first home much more straightforward. Here’s everything you need to know about the best first-time homebuyer programs in the state.
What is a homebuyers program?
There are different types of homebuyer programs, but they all have one goal: to make homeownership accessible to more people. Those who face financial obstacles or disadvantages through conventional loan or mortgage programs may benefit from a homebuyer program. Suitable applicants might include first-time buyers, veterans, or lower-income families.
Not everyone can access enough credit to purchase a home. State and private homebuyer programs help bridge the gap by offering mortgage benefits to those with lower-incomes.
Some homebuyer programs are guaranteed by the federal government, allowing the participating lender to compensate you with much better interest rates than if you were simply purchasing a home through conventional loans.
Nervous about getting started with the Illinois’ real estate market? Don’t be. At HomeLoanExpert, we aim to replace the stress of homebuying with kindness and community. The first step? Learning about how first-time homebuyer programs can help you reach your goals.
Benefits of first-time homebuyer programs in Illinois
Homebuyer programs offer varied benefits, depending on their guidelines, government influence, financial eligibility requirements, and more. The gist? A first-time homebuyer program helps you score a mortgage loan with better terms than you’d get with a conventional loan.
These may include:
- Better interest rates
- Longer loan terms
- Down payment assistance
- Lower down payment requirements
- Underserved group initiatives
- Counseling
- Lenient credit requirements
- Special attention to vets, first-responders, educators, and more
State housing authorities create homebuyer programs that combine closing cost and down payment assistance programs with mortgages with favorable interest rates. Some states even offer tax credits you can use on your federal tax return.
But isn’t it hard to score a mortgage approval if you don’t have a down payment or a good credit score? One of the primary purposes of a homebuyer program is to offer an easier pre-approval – fewer or more lenient credit requirements and less of a burden for a down payment.
What to know when buying a home in Illinois
We mentioned that the housing market in Illinois is quite active, with a $50,000 increase in average home prices. That might sound scary, but take solace that home price inflation is lower in Illinois than in other states.
Other states saw real estate increases of 14.9% on average, while Illinois only experienced an 8.4% increase. That’s a win for homebuyers!
Another thing to keep in mind is individual city support. Chicago, Joliet, and Aurora offer city-specific support for first-time homebuyers.
The Best Illinois First-Time HomeBuyer Programs
| Program | Min. Credit Score | ||
|---|---|---|---|
| FHA Loans |  | 500-580 | Learn More |
| IHDA Opening Doors |  | 640 | Learn More |
| IHDA Smart Buy | | 640 | Learn More |
| IHDAccess Forgivable | | 640 | Learn More |
| IDHAccess Deferred | | 640 | Learn More |
| Home Investment Partnership |  | Varies | Learn More |
| USDA |  | 620 | Learn More |
| VA Loans |  | Varies | Learn More |
| Chenoa Down Payment Assistance |  | 600-640 | Learn More |
| HomeReady® |  | 620-680 | Learn More |
| Home Possible® |  | 620-660 | Learn More |
| Conventional 97 | Varies | Learn More |
The Home Loan Expert
While The Home Loan Expert doesn’t offer specific first-time homebuyer programs, we help first-time homebuyers find their dream home with our wide variety of affordable loan options. Boasting a seamless online experience and a plethora of options for mortgages and home loans, we have the entire mortgage loan process contained under one roof, allowing us to quickly and efficiently close your loan.
We understand that the process can be a little bit overwhelming, so we offer same-day pre-approvals you can rely on through our 5-Minute Loan Approval* application. Ensuring that the process is as personal as it is professional, we always work to put the customer and the community first.
Loans & Services:
- Adjustable-Rate Mortgages
- Bank Statement Mortgages
- Cash-Out Refinance
- Conventional Loans
- Debt Consolidation
- FHA Loans
- First Responder Loan Program
- Fixed-Rate Loans
- Home Purchase Loan
- Jumbo Home Loans
- Union Loans
- USDA Loans
- VA Loans
- Zero Dollar
- No Income Verification Loans
Pros:
- Personalized and hands-on service
- Best in class closing costs
- Variety of loan and mortgage options
- Robust down payment assistance options
- Access to the newest mortgage loan products and in-house underwriting
Cons:
- Given the number of loan choices available, some prior homework might be necessary in order to zero in on the best loan for you.
Minimum down payment: Options available with down payments as low as 3%
Start the approval process at The Home Loan Expert today!
Federal Housing Administration Loans
The Federal Housing Administration (FHA) insures FHA Loans for mortgage companies. Meaning? They back the value of every loan so that mortgage lenders feel more comfortable easing up some of their requirements. The security of the FHA makes it easier for them to overlook poor credit or a lacking down payment.
The benefit? Eligible applicants can access better interest rates than conventional loans.
Here’s what you need to apply for an FHA Loan:
- 3.5% minimum down payment; if your credit is less-than-stellar, you might need a larger down payment
- A minimum credit score of 500, though 580 is ideal for maintaining the low down payment requirement
- A 43% or less debt-to-income ratio
- Mortgage insurance
- Intent to live in the property
- The property must meet FHA’s minimum property requirements
FHA Loans have various participating lenders, including The Home Loan Expert. We offer competitive benefits to our clients, including 100% financing–no down payment required.
Best for: People with lower credit scores interested in finding a new home.
IHDA Opening Doors
The Illinois Housing Development Authority offers a few first-time homebuyers programs for Illinois residents. The Opening Doors Program provides a lump sum loan of $6,000 for down payment assistance or closing costs. The best part? You don’t have to pay it back, as it’s forgiven after five years.
Here are some of the criteria for the Opening Doors Program:
- Offered to all buyers, including first-time homebuyers
- Ability to provide $1,000 or 1% of the purchase price
- Meets income and purchase price limits
- A minimum credit score of 640
- Intent to live in the property
- Willingness to complete homeownership education
Best for: Low–income individuals needing down payment assistance.
IHDA Smart Buy
The IHDA Smart Buy program targets those with student loans and offers $5,000 in assistance for down payments or closing costs. The program also provides up to $40,000 of student loan debt relief for those who qualify.
Criteria include:
- All buyers can apply (first-time and repeat homebuyers)
- Student loan debt must be from an eligible institution; accredited public, nonprofit, or proprietary college, university, or vocational.
- The loan must pay off at least one borrower’s full remaining student loan balance at loan close – no partial payoff of any borrower’s loans is permitted.
- Ability to provide $1,000 or 1% of the purchase price (whichever is greater)
- Meets income and purchase price limits
- A minimum credit score of 640
- Live in the home as primary residence
- Willingness to complete homeownership education
Best for: Low-income homebuyers with student loan debt.
IHDAccess Forgivable
IHDA’s Forgivable mortgage offers a similar $6,000 in down payment assistance that you could use within ten years. After that, you don’t have to pay it back. You can use this support for any mortgage type, including FHA, VA, and USDA Loans.
Here’s what you need to apply:
- Ability to provide $1,000 or 1% of the purchase price (whichever is greater)
- Meets income and purchase price limits
- A minimum credit score of 640
- Intent to live in the property
- Willingness to complete homeownership education
Best for: Low-income individuals needing down payment assistance.
IHDAccess Deferred
Another IHDA homebuyers loan on offer is the IHDAccess Deferred. With this program, you can receive up to $7,500 in down payment assistance (5% of the purchase property). First-time homebuyers will benefit, but repeat homebuyers also qualify.
Here are some eligibility requirements for the IHDAccess Deferred Program:
- Ability to provide $1,000 or 1% of the purchase price (whichever is greater)
- Meets income and purchase price limits
- A minimum credit score of 640
- Intent to live in the property
- Willingness to complete homeownership education
Best for: Low-income individuals seeking down payment assistance.
IHDAccess Repayable
IHDAccess Repayable offers eligible applicants a whopping $10,000 in down payment assistance. Of course, you could also use the funds for closing costs if you feel so inclined.
Eligibility criteria resemble much of the requirements for other IHDA programs, and include:
- Open to all buyers, including first-time homebuyers
- Ability to provide $1,000 or 1% of the purchase price (whichever is greater)
- Meets income and purchase price limits
- A minimum credit score of 640
- Intent to live in the property
- Willingness to complete homeownership education
Best for: Low-income individuals seeking down payment assistance.
HOME Investment Partnership Program
The Home Investment Partnership Program helps eligible homebuyers buy or build a new home. Assistance takes the form of grants, loan guarantees, lower interest rates, and deferred-payment loans, depending on individual scenarios.
At the minimum, here’s what you need to qualify:
- Intent to live in the home
- Property can’t exceed 95% of median area purchase price
- Jurisdiction must implement resale provisions to protect affordability
Best for: Everyone needing some form of assistance for a mortgage.
U.S. Department of Agriculture
Despite the popularity of Chicago, Illinois is almost three-quarters farmland. For Illinois residents interested in living a more rural life, USDA Loans, offered through the U.S Department of Agriculture, offer support. Meant to promote USDA rural development, USDA loans usually have the benefit of a 0% down payment and low interest rates.
You can access USDA Loans from mortgage lenders or directly from the USDA. There are two types of USDA loans. First is the Direct Home Loan, which offers eligible applicants support with their mortgage payments (usually a decided percentage of the purchase price, with limits on financial support each year).
Next, the Single-Family Housing Guaranteed Home Loan Program is the primary USDA mortgage loan. Offering 100% financing, you don’t need any amount of down payment to qualify. You can also use the funds to construct and build a new home or purchase an existing one in a rural area.
Here’s what you need to qualify for USDA Loans:
- Intent to live in the purchased property
- Earn under 115% of county median household income
- Property in a USDA-approved rural neighborhood
Many certified lenders offer USDA loans, but the best lender for your wallet is The Home Loan Expert. The Home Loan Expert offers zero down payments and low fixed interest rates, even accepting credit scores as low as 620.
Best for: People who need help qualifying for a mortgage and desire a rural life.
U.S. Department of Veteran Affairs
The U.S. Department of Veteran Affairs helps administrate VA Loans to help vets with mortgage relief. Here’s who can access the VA Loan Program:
- Service members
- Veterans
- Eligible surviving spouses
Eligible applicants can use the money to start construction, improve, build, or purchase a new home. Under this program, mortgage lenders also offer favorable loan terms and interest. The best part? It is a lifetime benefit that is reusable throughout a lifetime. And there’s no requirement to purchase mortgage insurance.
Here’s what you need to apply for a VA Loan:
- Be a U.S. Veteran, service member, National Guard member, or Reserve member
- Specific benefits depend on your service commitment, the character of service, and duty status
One popular VA mortgage lender is Hero Loan, servicing active-duty military, veterans, and their families. A desirable quality in their service is the quick turnaround. Hero Loan closes VA Loans in as little as 14 days, a fraction of the average 60 days needed. Additionally, Hero Loan underwrites all VA Loans in-house, saving them in costs and allowing them to continue offering lower rates.
Apply for your Hero Loan using the 5-Minute Loan Approval* application calculators online.
Best for: U.S. veterans, eligible surviving spouses, service members, National Guard members, or Reserve members looking to purchase a home.
Chenoa Down Payment Assistance Program
The Chenoa Down Payment Assistance program, offered by the CBC Mortgage Agency, offers up to 5% down payment assistance. Eligible applicants can also access:
- 18 months of counseling for homebuyers post-purchase
- Initiatives to support minorities and underserved communities in building wealth.
We recommend reaching out to Chenoa Fund customer service representatives for specific eligibility requirements. But overall, you’ll need a credit score of at least 600 to qualify.
Best for: Members of minority groups interested in obtaining a new home.
HomeReady Program
Administered by Fannie Mae, the HomeReady Mortgage Program provides eligible applicants with loans with as little as a 3% downpayment. Another pro is that you can cancel mortgage insurance after building 20% equity in your home. Finally, while the program is valuable for first-time homebuyers, second-time buyers can also reap its benefits.
Here’s what you need to apply:
- Intent to live in the home
- A minimum credit score of 620 (680 is ideal)
- An income below the median income of where you live
- Property is a single-family home, condominium, townhouse, or planned unit development
Best for: People with decent credit needing a break from big down payment requirements.
Home Possible Program
Freddie Mac’s Home Possible Program provides a collection of benefits for first-time homebuyers. Eligible buyers can score loans with as little as a 3% down payment. Here’s what you need to qualify:
- Income under 80% of the area median income (AMI)
- A credit score between 620 and 660
- Below 45% debt-to-income ratio
- Approval based on the Home Possible Income and Location Eligibility Calculators
Best for: Low-income borrowers with reasonable credit scores that can’t require down payment assistance.
Conventional 97 Loan
Conventional 97 loans are pretty straightforward. As the name suggests, the loan is worth 97% of the purchase property value, leaving only 3% needed for the down payment! Many mortgage lenders and agencies offer 97 Conventional Loans, such as Fannie Mae and Freddie Mac. Each lender has different eligibility requirements, so it’s best to examine each one’s terms.
Best for: Low-income people requiring down payment assistance.
What is the Best Illinois First-Time HomeBuyer Program of 2022?
Buying in Illinois becomes possible with all the first-time homebuyer programs available. Our advice? Down payment assistance is valuable. Loans that offer 100% financing are ideal if the interest is relatively low, which frees up some funds to focus on your loved ones and family without feeling so strained to come up with a down payment.
The best of the first-time homebuyer programs include FHA loans, First Responder Home Loans, USDA loans, and Illinois VA Loans–all offered by The Home Loan Expert. Qualify for one of these, and you’re off to the real estate races.
At The Home Loan Expert our years of combined experience make us trusted authorities in the mortgage industry without the stress and anxiety of your average lender. Our goal is to help you reach your home goals, whether it’s a little rural house in Lee County or a two-story loft in downtown Chicago.
You can’t go wrong with having The Home Loan Expert on your side. To learn more about how they can help you get the home of your dreams, get started with your loan application today!
The Home Loan Expert
