Free Home Buying Guide

Home Buying Info

Illinois housing development programs

IHDAccess Forgivable Mortgage

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  • 4% of the purchase price up to $6,000 in assistance for down payment & closing costs, forgiven monthly over 10 years – it’s a gift that does not have to be repaid
  • 30-year, fixed rate mortgage with an affordable interest rate
  • Available for all mortgage types, including FHA, VA, USDA and FNMA HFA Preferred
  • Available to first-time and repeat homebuyers statewide

IHDAccess Repayable Mortgage

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  • 10% of the purchase price up to $10,000 in assistance for down payment & closing costs offered as an interest-free loan – repaid monthly over a 10 year period
  • 30-year, fixed rate mortgage with an affordable interest rate
  • Available for all mortgage types, including FHA, VA, USDA and FNMA HFA Preferred
  • Available to first-time and repeat homebuyers statewide

IHDAccess Defered Mortgage

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  • 5% of the purchase price up to $7,500 in assistance for down payment & closing costs offered as an interest-free loan, deferred for the life of your mortgage – you don’t need to repay until you sell your house, refinance, or pay off your mortgage
  • 30-year, fixed rate mortgage with an affordable interest rate
  • Available for all mortgage types, including FHA, VA, USDA and FNMA HFA Preferred
  • Available to first-time and repeat homebuyers statewide

1st Home Program

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  • $7,500 in assistance for down payment and closing costs
  • A secure, 30-year fixed-rate mortgage with a competitive interest rate
  • Hasn’t owned a home in the last three years including first-time homebuyers, and all Veterans
  • Is purchasing in the following counties: Cook, Marion, St. Clair, or Winnebago (ELIGIBLE COUNTIES UPDATED AS OF 1/1/2019)
  • Choice of FHA, VA, USDA or Conventional loan type

FHA Loans

FHA loans first time home buyer financing purchase lending banks

What you need to know.

An FHA loan is a mortgage insured by the Federal Housing Administration. With a minimum 3.5% down payment for borrowers with a credit score of 580 or higher, FHA loans are popular among first-time home buyers who have little savings or flawed credit.

How FHA is different

It's easier to qualify for an FHA loan than for a conventional loan, which is a mortgage that is not insured or guaranteed by the federal government. An FHA loan allows for lower credit scores and, in some cases, lower monthly mortgage insurance payments. 

FHA loan eligibility and requirements

Credit score. If your credit score is 500 or higher, you may qualify for an FHA loan. Minimum credit score on conventional mortgages is 620 but can vary by loan program and lender.  

Minimum down payment. The minimum down payment on an FHA loan is 3.5% if your credit score is 580 or higher. The minimum down payment is 10% with a credit score of 500 to 579.

Loan limits. The maximum FHA loan size depends on where the home is. The limit is lower in the least expensive housing markets and higher in the most expensive housing markets.

Debt-to-income ratios. With both FHA and conventional mortgages, your total monthly debt payments can be up to 50% of your pretax income.

Mortgage insurance. FHA mortgage insurance cannot be canceled if you made a down payment of less than 10%, while private mortgage insurance on conventional loans can be canceled after you have accumulated sufficient home equity.

Foreclosure. You can't have a foreclosure or have given up your property’s deed in lieu of foreclosure within the past three years. There are exceptions for extenuating circumstances such as serious illness or the death of a wage earner.

VA Loans

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Who Qualifies

You're entitled to apply for a VA mortgage if you're active duty or have separated from military service under an “other than dishonorable discharge,” the VA says.

Additionally:

  • Veterans must meet length-of-service requirements
  • Service members on active duty must serve for a minimum period
  • Reservists and National Guard members may be eligible
  • Surviving spouses of deceased veterans may qualify

How to get your certificate To tap your VA loan benefit, you will need a certificate of eligibility from the VA. Nelms says you can get a certificate in three ways:

The certificate is most often obtained through a lender, Nelms says, by accessing a web-based system called WebLGY.

How to complete your certificate To complete the certificate, and depending on your situation, you’ll need signed evidence of:

  • A statement of military service
  • The reason for your separation and record of service
  • Particular forms showing discharge information
  • Your surviving-spouse status

General Requirements


  • While a VA mortgage's qualifying requirements are more relaxed than those for a conventional loan, an applicant still needs to have decent credit and sufficient income to buy a home. And the home being financed must serve as the primary residence.  
  • The VA doesn’t set a minimum credit score to qualify for a loan. Instead, it requires a lender “to review the entire loan profile to make a lending decision,” according to the VA. 
  • The VA also doesn't specify a maximum debt-to-income ratio. But if the total debt-to-income ratio is over 41%, lenders will need to provide proof of an applicant’s ability to repay the loan, says Greg Nelms, the VA's chief of loan policy. 
  • Under most circumstances, you don't need to make a down payment. But if you decide to put some money down, it will likely reduce the VA funding fee. However, if the purchase price of the home is greater than its appraised value — or above the county loan limit — you may have to make up at least a portion of the difference.
  • The maximum VA loan guaranty limits the value of a home that can be purchased with no down payment. In 2019, a qualified borrower generally can buy a home with a value of up to $484,350 with no down payment, though the actual amount varies by county.
  • As with other government-insured home loans, the VA has stringent property requirements. Most involve a property’s safety, living conditions and compliance with building codes. Newly built homes must have certain warranties or protection plans or have been built by a veteran for his or her own occupancy, though there are additional exceptions.
  • While a VA-insured home loan carries no mortgage insurance requirement, you will be charged a funding fee. This helps the VA cover the costs of mortgage foreclosures. The amount of the fee ranges from 1.25% to 3.3% of the loan amount, depending on the down payment, how long you served and for which branch of the military, and whether you’ve tapped your VA home loan benefit previously.