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Buying a home within the walls of Chicago can be difficult, most residents rent, and the price of property tends to be on the higher side. While difficult, it’s not impossible if you’re properly prepared to purchase a home. Thankfully, there are a handful of great mortgage programs available in Illinois that offer assistance to those who need it.

Before you go hunting for your dream house in the perfect corner of the city, you should be shopping for a pre-approval letter from at least two different lenders. Depending on your location and financials, lenders will be able to offer you different rates, terms, and loan amounts. It’s important to find a lender that you are comfortable working with – make sure they straightforwardly answer all your questions and are always working in your best interest.

Once you have a pre-approval letter, you’ll better understand what kind of home you can afford on your budget. Now you can start working with a real estate agent, touring homes, and making offers. This is just the beginning of the home buying process – from here out, you’ll be working closely with your lender to get all the proper verifications and documents in order. They’ll handle the work but will need your corporation and communication to complete the process in a timely manner.

The average price of a home in the city of Chicago is usually around $300,000 – and rising. Monthly mortgage payments are calculated based on your down-payment, interest rate, cost of insurance, and taxes. For a $300,000 home in Chicago, with a down payment of 20%, an interest rate of 3.5%, and a term of 30 years – you can expect to pay around $1,400 a month. While this figure may seem comparable to the renting options in the area, there are additional costs and responsibilities that come with owning a home.

For young or first-time homeowners, a 20% down-payment could feel out of reach. It’s not common to have $60,000 (20% of $300,000) saved, but fortunately, there are many programs available that are backed by the government and provide down-payment and closing cost assistance. It’s possible to qualify for the home you want with down-payments as low as 3.5%.

These great mortgage assistance programs were developed by the Illinois Housing Development Authority (IHDA) and are available through approved lenders like us. Each of these programs is available to any homebuyer in Illinois that can meet the requirements. The goal of these programs is to simply assist any potential borrower in getting into a home. Most people find assistance one way or another when purchasing a home and finding the right program for you is an important step in the process. The main difference is the amount of assistance you can receive, so it might feel repetitive, but the information is important!

SmartBuy Program

If you’ve been hesitant about purchasing a home due to student loan debt, the SmartBuy Program could be exactly what you’re looking for. Your lender will pay 15% of the purchase price towards the payoff of your student loans up to $40,000. It also comes with a $5,000 deferred loan that can be used for down payment assistance or closing costs. This is a Fannie Mae program that can only be used with a 30-year fixed interest rate.

To qualify, you must have at least $1,000 in student loan debt and be current on payments. Income and purchase price limits are applied. All student loans must be paid off at closing by assistance or in combination with the borrower funds.

IHDA Access Repayable

The IHDA Access Repayable Mortgage offers borrowers 10% of the purchase price up to $10,000. This money can only be used for the down payment and closing cost assistance and is offered as an interest-free loan that is repaid monthly over ten years. This program can only be used for a 30-year mortgage with a fixed interest rate (known as 30-year fixed). On top of that, if eligible, this program can be combined with the Federal Housing Administration (FHA), Veteran Affairs (VA), or United States Department of Agriculture (USDA) programs. While this program may be great for first-time homebuyers, it is also available to repeat buyers throughout the state of Illinois.

IHDA Access Deferred

The IHDA Access Deferred Mortgage offers borrowers 5% of the purchase price up to $7,500. This money can only be used for the down payment and closing cost assistance and is offered as an interest-free loan. Instead of paying it back monthly over ten years, this loan is deferred for the life of your mortgage, meaning you don’t need to repay it until you sell, refinance, or pay off the mortgage. This program can only be used for a 30-year fixed mortgage. On top of that, if eligible, this program can be combined with the Federal Housing Administration (FHA), Veteran Affairs (VA), or United States Department of Agriculture (USDA) programs. While this program may be great for first-time homebuyers, it is also available to repeat buyers throughout the state of Illinois.

IHDA Access Forgivable

The IHDA Access Forgivable Mortgage offers borrowers 4% of the purchase price up to $6,000. This money can only be used for the down payment and closing cost assistance and is forgiven monthly over ten years, meaning it is a gift that does not have to be repaid. This program can only be used for a 30-year mortgage with a fixed interest rate (known as 30-year fixed). On top of that, if eligible, this program can be combined with the Federal Housing Administration (FHA), Veteran Affairs (VA), or United States Department of Agriculture (USDA) programs. While this program may be great for first-time homebuyers, it is also available to repeat buyers throughout the state of Illinois.

For each of these programs, competitive interest rates are offered but there are eligibility requirements. There are household income and purchase price limits (information below), but both new construction and existing homes are eligible. There is also a minimum credit score of 640 required.

Household Income Limits – for borrowers to be eligible, they must meet the income limits set in their county.

Purchase Price Limits – like the income limits, the home that borrowers are interested in must be below a certain value.

To view the income and purchase price limits in your county, take a look at this graph provided by IHDA:

Income and Purchase Price Limits

While not mandatory, there are housing counselors available to answer any questions and go over pre-purchase planning. For more information on this topic, read the information on IDHA’s website here:

Financial Literacy and Pre-Purchase Counseling

For even more information on each of these programs, read this page on their website:

Program Information

Remember to double-check with your lender and make sure they offer the program you want before you agree to anything. Each IHDA program is designed to help borrowers in a specific scenario and can be a great option for any homeowner.

Frequently Asked Questions About Buying a Home in Chicago

Interest rates will always be changing based on the state of the economy, but the rate you receive will come down to your personal financial situation. Right now, if you want a 30-year-fixed mortgage, make a 20% down payment, and have an above-average credit score, you could expect a rate of roughly 3%. It could be higher or lower, but it will vary based on your financials and the lender you choose to work with.

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