Affordable Mortgage Programs
The following specialized 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!
- HomePower Mortgage Assistance Program: The Partnership for HomeOwnership (PFHO), a non-profit foundation of the Illinois Association of REALTORS (IAR), assists cities and community groups with the development of affordable housing programs. IAR and PHFO, along with the Illinois Housing Development Authority (IHDA), the Mortgage Guaranty Insurance Corporation (MGIC) and the Chicago Federal Home Loan Bank (FHLB) offer the HomePower Mortgage Assistance Program, targeting individuals and families with income at or below 80% of the Cook County median income. Applicants must be first-time homebuyers or not have owned a home within three years. The program serves over 30 communities in Cook County.
- The USDA Illinois Guaranteed Rural Housing Loan: Offers 100% financing with no monthly mortgage insurance, competitive fixed interest rates and expanded qualifying ratios of 29% and 41%. 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 RD lenders.
- The FHA Loan: The Federal Housing Administration offers a single-family, low down payment loan which allows wider debt ratios of 41%. By comparison, conventional total debt ratios usually range between 36% and 38%. The entire down payment can be a gift, closing costs can be financed and the seller can assist with that cost. However, the borrower must have 3% of the purchase price invested in the transaction. Unfortunately, FHA mortgage insurance is paid over the life of the loan. However, this is a good loan for those borrowers with little down payment savings.
- NEWS UPDATE: FHA loan limit increases to help homebuyers in Illinois. As part of the President’s recently signed economic stimulus package, loan limits have increased for Federal Housing Authority (FHA) mortgage loans as well as conforming loans from Fannie Mae and Freddie Mac. NAR research finds that increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of homeownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. REALTORS also believe that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market. Learn more by contacting an Illinois REALTOR or visit HUD.
- The VA Loan: The Veterans Administration loans are often made without any down payment at all. These loans also allow wider debt ratios of 41%. The veteran's certificate of eligibility must be available at the time of the loan application. If the veteran has had a previous VA loan that was assumed by a non-veteran, his/her eligibility amount will be reduced by that amount. If the prior loan was paid off, his/her eligibility returns to the full amount. Read more about the VA Home Loan Guaranty Program.
- Our Own Home: A program of the Illinois State Treasurer’s Office that helps people purchase their first home or refinance if payments have been missed due to circumstances beyond the homeowner’s control. Through Our Own Home, the State Treasurer’s Office guarantees 10% of the loan value to the financial institution as security for the loan. Applicants must be unable to qualify for a conventional mortgage and have an annual household income of $75,000 or less. The program is free for both the lender and the borrower.
- Illinois Housing Development Authority (IHDA) First Time Home Buyer Program: IHDA offers a lower-than-market rate down payment to first-time borrowers or those who have not owned a home in three years. Often IHDA offers very low interest rates and closing cost assistance with loan programs targeted to specific lower income families. These programs run at different times in different locations. Visit www.idha.org for more information.
o IHDA I-Loan Program offers a below market, 30-year fixed rate mortgage to help low and moderate income families and individuals become first-time homebuyers.
o IHDA also offers Mortgage Credit Certificates for first-time homebuyers or borrowers who have not owned a home in three years. This certificate allows up to 25% 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.