State and Federal Loan Programs

The following specialized mortgage loan programs can help prospective buyers get better financing. Your Illinois REALTOR® can provide you with mortgage information, discuss financing options and recommend loan sources to help you get into your new home!

Welcome Home Heroes

Welcome Home Heroes aims at providing closing costs and downpayment assistance to Illinois Veterans and active military members. It is estimated that nearly 1,000 Illinois veterans and active duty military members will qualify for the $10,000 grants and other tax credit incentives. For more information, please visit www.ihda.org or download the fact sheet (pdf).

Illinois SmartMove Loan Program

Offers up to $6,000 for down payment and closing costs as a 10-year zero percent forgivable loan. The program is administered by the Illinois Housing Development Authority and targets borrowers who need extra flexibility on sources of income or who have limited funds for down payment and closing costs. SmartMove's features included: maximum loan-to-value (LTV) ratios from 96.5 to 100 percent; conventional, FHA, USDA products available; fixed-rate loans with up to 30-year terms; and mortgage insurance requirements at one-third less than other conventional products. Household income and purchase price limits apply. Learn more about qualification requirements and lenders offering SmartMove at www.ihda.org, download an informational flyer or call 312-836-5200 to speak with IHDA's Homeownership Originations department.

Illinois Hardest Hit Program. 

The Illinois Housing Development Authority has partnered with the U.S. Department of Treasury to offer temporary mortgage payment assistance to households that are struggling with income loss due to unemployment or underemployment, but are working to regain sufficient income to keep their home.

The Illinois Hardest Hit Program offers two types of assistance:

1. Reinstatement assistance to pay mortgage arrearages, fees, and penalties in full, and

2. Monthly mortgage payment assistance to pay 100% of the mortgage payment owed to the servicer for up to 18 months while the household makes monthly contribution payments to the Illinois Housing Development Authority during their enrollment in the program. Maximum assistance is $25,000, depending on location.

Learn more at IllinoisHardestHit.org | Download the news release (pdf) 9/15/11

Local City or County Programs

Check with your local city or county government. For example, the City of Chicago has a Home Purchase Assistance (HPA) program that offers down payment and closing cost assistance to qualifying first time homebuyers. The HOME Program adminstered both by HUD and IHDA helps homebuyers in participating Illinois cities and counties with down payment and closing cost assistance.

FHA Loans

Since 1934, mortgages insured through the Federal Housing Administration (FHA) have helped millions of people buy a home. Because FHA loans are insured by the federal government, they offer competitive interest rates and are an option for buyers with less than perfect credit. They have a low 3.5 percent down payment and, unlike conventional loans, that money can come from a family member, employer or charitable organization. FHA loans can be used to buy a home, finance repairs to an existing home or for seniors aged 62 or older, be used for a reverse mortgage. http://www.hud.gov/buying/loans.cfm 

• UPDATE (Dec. 2011) -- FHA extends “anti-flipping” waiver through the end of 2012, which allows buyers to purchase homes that have already been sold in the last 90 days. Read more.
• Find the FHA loan limits for your area.

USDA Illinois Guaranteed Rural Housing Loan

This program offers 100 percent financing with no monthly mortgage insurance, competitive fixed interest rates and expanded qualifying ratios of 29 percent and 41 percent. There is a one-time guarantee fee that may be rolled into the loan at close regardless of the appraised value. Existing dwellings or new construction properties qualify when located in eligible rural areas. This program is NOT just for first-time buyers. Applicants may apply with local approved Rural Development lenders. www.rurdev.usda.gov
 

Veterans Administration (VA) Home Loan Program

VA can guarantee a portion of a loan made by a private lender to help you buy a home, a manufactured home, a lot for a manufactured home, a condominium unit, or a unit in a cooperative dwelling. VA also guarantees loans for building, repairing, and improving homes. If you have a VA mortgage, the VA can help you refinance your loan at a lower interest rate. You may also refinance a non-VA loan. Certain disabled veterans and military personnel can receive grants to adapt or acquire housing suitable for their needs. www.homeloans.va.gov

Finally Home

Established by the Illinois State Treasurer’s Office in 2002, the program helps qualifying Illinois residents buy a home or keep their existing homes from going into foreclosure. It’s a free program that helps borrowers who cannot obtain conventional mortgages from credible lenders due to credit issues or a high debt-to-income ratio. The program can also help borrowers refinance a mortgage if they are facing an ARM reset or certain financial hardships defined by statute and show that that they will likely be able to continue or resume making payments. www.treasurer.il.gov/programs/finally-home/finally-home.aspx 
 

Mortgage Credit Certificate

This program of the Illinois Housing Development Authority applies to first-time homebuyers or borrowers who have not owned a home in three years. The Mortgage Credit Certificate (MCC) allows up to 20 percent of the mortgage interest (up to $2,000) to be claimed as an IRS tax credit. This can be an immediate benefit by filing a revised W-4 withholding (more take-home pay) or as a tax refund at the end of the year. This certificate must be applied for at the time of loan application and can be used with any FHA, VA, RD or conventional loan, allowing the borrower to qualify for a more expensive home, and good for the life of the loan. www.ihda.org