Are you a first-time homebuyer shopping for a new house in the Prairie State? Whether you’re dreaming of a home in the Windy City or starting a family in the Midwest suburbs, Illinois is a great place to start your homeownership journey.
If you’re ready to buy your first home in Illinois, there’s plenty of help between statewide and locally-run homeownership assistance programs. These initiatives can help first-time homebuyers with everything from down payment assistance, to securing a low interest rate mortgage, closing costs assistance and tax credits.
These are worth doing your homework on; if you qualify for one or multiple programs, they could give you the financial edge you need to purchase a home.
Read on to learn more about these programs, their eligibility requirements and how to apply.
Who Qualifies as a First-Time Homebuyer in Illinois?
A first-time homebuyer in Illinois is any family or individual who has never owned a home. For the majority of local programs, you’re also considered a first-time homebuyer if you haven’t owned a home in the past three years.
If you’re nearing the three-year mark, it may be worth waiting so you can become eligible again for any of these programs with this caveat.
There’s a silver lining, too. The statewide programs listed below apply to first-time homebuyers and repeat buyers alike. If you’re already an established homeowner, Illinois Housing Development Authority programs are all fair game.
As always, when you’re doing your research, read the fine print. Also refer to limitations listed below.
Statewide Homeownership Assistance Programs
The Illinois Housing Development Authority has a series of statewide assistance programs. Across the state, nearly 10% of all first-time homebuyers make use of the IHDA programs below to help bridge the gap to homeownership. It’s worth noting that repeat homebuyers are eligible for all of the IHDA’s mortgage programs too.
These programs are available across all of Illinois. They’re pretty generous – you only need to invest $1,000 out of your own pocket to gain access to most of these programs. They’re tailor-made to help homebuyers with student debt, or from low- to moderate-income households and need a hand with coming up with a down payment.
Here’s a detailed look at each of the programs, along with their full requirements and application details on the IHDA official website.
IHDA Opening Doors Mortgage Program
The IHDA Opening Doors Mortgage Program provides $6,000 in down payment and closing costs assistance that’s forgiven monthly over the course of 5 years. Ultimately, the loan doesn’t have to be repaid. The financial assistance is paired with access to a 30-year fixed-rate mortgage set at a competitive interest rate.
This program applies to first-time and repeat homebuyers alike. You’ll have to contribute $1,000 or 1% of your home’s purchase price, whichever is greater, and you must meet income and purchase price limits.
Homebuyers must occupy the home as their primary residence. Further, they must have a minimum credit score of 640, and complete a homeownership education course prior to closing. You can do this online or in-person.
Click on this link to apply via an IHDA partnered lender.
IHDA Smart Buy Mortgage Program
The IHDA Smart Buy Mortgage Program was created to help low- and moderate-income homebuyers who are paying off student loans.
In this case, Smart Buy offers first-time and repeat homebuyers an affordable 30-year first mortgage with a low fixed interest rate. Homebuyers can also take advantage of a 0% second mortgage for up to $5,000. This second mortgage provides homebuyers with the cash to help with a down payment and closing costs. The loan is deferred and doesn’t need to be repaid until you sell or refinance your property.
Homebuyers can also apply for a three-year promissory note and deed restriction for 15% of their home’s purchase price, up to $40,000.
You’re eligible if you have at least $1,000 in student loan debt in your name for your post-secondary studies, from college, university, or vocational school.
Homebuyers need to use the home as their primary residence, have a minimum credit score of 640, and complete a homeownership education course prior to closing.
IHDA Access Forgivable Mortgage Program
The Access Forgivable Mortgage Program is the IHDA’s flagship program, offering all homebuyers a safe, 30-year, fixed rate mortgage; the interest rate will never fluctuate..
Access Forgivable also provides 4% of your home’s purchase price or up to $6,000 in down payment and closing costs assistance. This funding is forgiven monthly over the course of a decade so it doesn’t have to be repaid as long as you use the home as your primary residence.
All homebuyers – repeat and first-time – can apply as long as their property is in Illinois. The same requirements apply: Homebuyers must use the home as their primary residence, have a minimum credit score of 640, and complete a homeownership education course prior to closing.
You’ll also need to contribute $1,000 or 1% of your home’s purchase price, whichever is greater and fall within their income and purchase price limits.
IHDA Access Deferred Mortgage Program
The Access Deferred Mortgage Program is similar to the IHDA’s Access Forgivable initiative. In a nutshell, Access Deferred provides all homebuyers with a 30-year fixed rate mortgage.
You’ll also receive up to 5% of your home’s purchase price – to a maximum of $7,500 – in down payment and closing cost assistance. This is offered in an interest-free loan, deferred for as long as you keep your home as your primary residence. Unlike the Access Forgivable program, this is a loan that must be repaid but only upon sale or refinancing of your property.
You’ll need to throw in $1,000 or up to 1% of your home’s purchase price, meet credit requirements, and complete a homeownership education course too.
IHDA Access Repayable Mortgage Program
The IHDA Access Repayable Mortgage Program provides a 30-year fixed-rate mortgage to all homebuyers. With this program, you can receive up to $10,000 in down payment and closing cost assistance that’s provided in an interest-free loan which can be repaid over 10 years.
You need to cover $1,000 or 1% of your home’s purchase price, whichever is greater. So for as little as $1,000 out of your pocket, you can obtain a home with the help of a hefty $10,000 to cover your down payment.
All homebuyers can apply as long as their purchase is in Illinois.
Homebuyer Programs by Location in Illinois
The IHDA’s slate of mortgage programs can help you obtain keys to your first home, but there are local options available in cities, towns and counties, also.
These locally-run programs are a mixed mag – the majority are focused on helping homebuyers who are from a lower-income bracket, whether you’re a first-time homebuyer or not. Read more for our complete rundown of local programs.
Alton has a decades-old Homeownership Program that’s helped more than 750 families buy their homes since 1997. Through the program, low-income homebuyers can apply for a five-year, forgivable loan of between $3,000 and $5,000 depending on your financial need.
The only catch is you’ll need to contribute at least $1,000 towards the purchase of your home and complete a homebuyer’s education course prior to closing.
Full details, including income guidelines and how to apply, can be found on the City of Alton’s program page.
Looking for a new home in Chicago? The state’s capital city is a great place to set roots, and city-organized programs can help you make this happen.
For starters, there’s the Building Neighborhoods and Affordable Homes Program, which encourages homebuyers to move into targeted neighborhoods: Englewood Square, North Lawndale, South Lawndale, Humboldt Park and Woodlawn. The program provides up to $40,000 in purchase assistance to buyers of single-family homes.
You’ll need to meet area median income levels and commit to living in your home for a minimum of 10 years. Read more about the BNAH Program.
There’s also TaxSmart, a Mortgage Credit Certificate (MCC) program that will provide a federal income tax credit to qualified first-time homebuyers. The MCC is an official document issued by the City of Chicago; you can claim a tax credit for a portion of the mortgage interest paid each year. The current rate of annual savings is 25% for a home purchase, with a ceiling of $2,000.
You’ll need to apply for the MCC when you obtain your mortgage – and not post-closing.
Check out the full details and eligibility criteria on the TaxSmart website.
Finally, the city offers a Neighborhood Lending Home Purchase Program, which helps homebuyers with down payment assistance, closing costs assistance, and affordability assistance based on your debt-to-income ratio. You could qualify for a grant of up to 7% of your loan amount to help you manage your down payment and mortgage.
Check out the NLHP program details here.
Looking for a home in Cook County? If gathering funds for a down payment is the only thing standing in your way, Wintrust Community Bank has a Homebuyer Grant Program that provides first-time homebuyers with $2,000 in free cash to help.
You must have a minimum credit score of 620, and will need to complete a homebuyer’s education course by closing. You also must pay for at least $1,000 of your home’s purchase price.
Read more on the Wintrust official website.
If you are shopping for a new home in Joliet, check out the city’s Down Payment Assistance Program, which provides low-income homebuyers with financial assistance worth up to 20% of your home’s purchase price. The minimum down payment assistance is $1,000. The funding is provided in a 0% interest, deferred payment loan. It’s forgivable, which means you might not have to pay it back!
Homebuyers need to invest $2,500 of their own funds into the home’s purchase. All housing types, including manufactured homes on a fixed foundation are eligible. The only exclusion is homes located in the 100-year flood plain and those that are tenant-occupied.
Read more about the program on the City of Joliet’s website.
Kane County offers a First-Time Homebuyer Loan Program that provides homebuyers with up to $10,000 in down payment assistance in the form of a 0% interest deferred payment loan. You won’t pay one penny of interest and you don’t have to pay anything back until you sell your home, transfer the title or no longer use the home as your primary residence. You can even apply for another $10,000 in assistance if your home is within the city limits of St. Charles.
To qualify, you must live – or work full-time – in Kane County. An important caveat is that you must have resided in the county for at least one year prior to submitting an application. You must not exceed federal income limits, and will need to complete homebuyer counseling. Further, you are required to make a down payment of at least 1% of your home’s purchase price.
Your purchase can be a detached home, townhouse, or condominium but it needs to pass a general visual inspection and a lead-based paint inspection.
Kankakee has its own Homebuyer Incentive Program – or KHIP – which provides $2,500 grants on a first-come, first-served basis. It’s set aside for low- to moderate-income families buying homes in low- to moderate-income census tracts.
You’ll need to meet income requirements and complete a homebuyer education course. Read more on the city of Kankakee website.
Madison County operates a Homebuyer Program that offers 5-year forgivable loans of up to $5,000 to first-time homebuyers who meet income guidelines. You’ll need to earn roughly 80% or less of the county’s area median income to be eligible. You also must commit to residing in the home for at least five years as the loan is forgiven only after five years’ occupancy.
Homebuyers must complete a homeowner’s education course, have a credit score of at least 620, and they must have two years’ steady income.
All existing and newly-built homes are eligible as long as the property is your primary residence.
Read more on the Madison County HOMEbuyer program website.
If you’re house-shopping in Normal, consider applying for the town’s homeownership assistance program that will provide you with a $3,000 grant to help with your down payment and closing costs. The program has been operating for nearly two decades and has helped hundreds of families purchase a home.
This is a needs-based program so you don’t need to be a first-time homebuyer. Instead, you’ll need to show that you wouldn’t be able to qualify for a mortgage without this financial assistance. The grants are provided on a first come, first served basis.
Check out the full details on the Town of Normal’s website.
Thinking of buying a new home in Rockford? Look into the Homebuyer Assistance Program, which could provide you with financial assistance of up to $15,000 in a forgivable loan. The grant amount is based on your income, debt and anticipated mortgage.
You’ll need to commit to living in the home for approximately 6 years to qualify for the forgivable loan. All single-family homes, duplexes and condominiums are eligible as long as they’re within Rockford city limits.
Also, you can’t have declared bankruptcy in the past two years or experienced a foreclosure in the past 3 years. You’ll also need to complete a homebuyer’s education course and pay a minimum of $250 towards the cost of your home.
The full list of requirements, including the income limits, are located on the City of Rockford’s website.
Ready to Make Illinois Your New Home?
Buying your piece of the Prairie State is more affordable than you may think with these statewide and regional programs on your side.
Whether you’re shopping for a home in Champaign-Urbana or scoping out properties in Chicago or Rockford, there is no shortage of housing options. There are the suburbs on the Shores of Lake Michigan, which are perfect for families, and then there’s the Rockford Area, which has everything you’d want from the Midwest.
The links on this site were researched by NewHomeSource. This is as cohesive a list as possible. Individual homebuyers should contact entities to fully understand requirements and processes.
Other Illinois Resources
Carmen Chai is an award-winning Canadian journalist who has lived and reported from major cities such as Vancouver, Toronto, London and Paris. For NewHomeSource, Carmen covers a variety of topics, including insurance, mortgages, and more.