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 – and may be able to help you find financing that suits your needs and helps get you into your new home!

• Illinois Home Start Loan Program offers affordable interest rates and down payment assistance for first-time homebuyers and veterans.This Illinois Housing Development Authority (IHDA) program offers two loans: the Home Start 30-Year Fixed Rate Loan and an optional Home Start Down Payment Assistance Loan. It is available through IHDA lending partners across the state. Learn more about the loan programs.
   
• NEW! IHDA Tax Credit Advance Loan. Use the federal first-time homebuyer tax credit for your down payment with the IHDA Tax Credit Advance Loan, which provides 3 percent of the purchase price (up to $6,000). This program is only available when used in conjunction with the Home Start first mortgage and expires April 30, 2010.
   
• 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. www.hud.gov/fha/choosefha.cfm

FHA loan limit increases to help homebuyers in Illinois. HUD published new 2009 FHA loan limits per the American Recovery and Reinvestment Act. Find the new 2009 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/IL/ 
   

• 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.
  Formerly known as Our Own Home, this program was established by the Illinois State Treasurer’s Office in 2002 to help 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 
   

• Rural Housing Initiative. This program of the Partnership for HomeOwnership foundation targets individuals/families with income at or below 65 percent of county median income as determined by the Illinois Housing Development Authority (IHDA). Applicants must be first-time homebuyers or not have owned a home within three years in rural Illinois counties. Cities of population less than 20,000 (or 10,000 outside a metro-statistical area are) are eligible. www.pfho.org