Like many Midwest industrial states, Illinois has been especially hard-hit during the nation's recent sustained economic downturn. Housing prices in Illinois have fallen as well as the number of people who qualify for mortgages. In order to help, the state of Illinois provides quite a few home loans and rehabilitation programs aimed at assisting first time home buyers secure home loans, current homeowners pay for rehabilitation, and in preventing foreclosure for those who can no longer afford their monthly mortgage payments.
Illinois residents looking to purchase their first home have access to several state programs, a handful of HUD grants, and even some assistance from private, nonprofit organizations. A good source of information is the Illinois Housing Development Agency (IHDA) website. First time home buyers can also ask their mortgage brokers and real estate agents for information about first time home buyer programs in the state or their local area.
Illinois Housing Development Agency
The IHDA is a state agency originally established to preserve affordable housing in the state of Illinois. Since its inception the agency has helped to provide financing for more than 200,000 homes at a cost of approximately $9.67 billion. The agency is self-supporting in terms of securing the funding for its own day-to-day operations while providing financing for low income home buyers through a variety of means including:
- the Illinois Affordable Housing Trust Fund
- the Illinois Affordable Housing Donations Tax Credit Fund
- federal Low Income Housing Tax Credits
- federal HOME Program funds
IHDA Loan Program
The IHDA loan program provides low interest home loans to first-time buyers. This loan program differs from similar programs in other states in both restrictions and what it provides. A typical loan from this program is a 30 year, fixed-rate product with a substantially lower interest rate than one can find on a conventional loan. Qualified applicants can also receive up to $6,000 to fund the downpayment and closing costs. The downpayment assistance is offered as a 0% loan which is forgivable if certain conditions are met.
Applicants must be first time home buyers or those with a qualified exemption, must meet certain income requirements, must complete a free home ownership education program, and must have a minimum credit score of 620. Approved applicants must contribute either $1,000 or 1% of the purchase price of the home, whichever is greater. Private mortgage insurance will be required but it's typically as much as 30% lower than conventional loans.
HOME Program
The IHDA was selected by HUD to be the organization in the state of Illinois administering federal grants. HUD grants are given in Illinois for three specific purposes, but only one applies to first time home buyers. They are grants designed to help low income individuals and families purchase their first home. The catch with this program is that it's designed to put new owners into homes that need significant rehabilitation. The program provides both low interest mortgages and grant money for rehabilitation.
DuPage Homestead Program
The DuPage Homestead Program is a financial assistance opportunity for low and moderate income households administered by the DuPage Homeownership Center (DHOC). DHOC is a nonprofit organization which provides assistance, counseling, and other services to first time home buyers.
The Homestead program provides low-interest loans to first time home buyers whose income does not exceed certain limits based on family size. Borrowers must not have owned another home in the three years prior to application, must have 24 months of verifiable credit, cannot have non-discharged bankruptcies, and must be free of federal, state, and local tax debts.
Other Home Buyer Programs
The official HUD website lists several other state and local opportunities in Illinois. It should be noted that these opportunities are generally not offered on an ongoing basis, so following some of the links may prove to be unfruitful. Nonetheless, when state and local housing assistance programs are available your mortgage broker and real estate agents should both be aware of them. Interested consumers may want to visit the HUD home page for more details.