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How to qualify for IHDA down payment assistance in Illinois


If you plan to purchase a home in Illinois, IHDA (Illinois Housing Development Authority) has down payment assistance programs to help you. These programs are geared toward helping first-time home buyers, but some of their programs are open to repeat buyers as well.

In this blog, we’ll cover the benefits of IHDA, the five different IHDA programs, and how to qualify and apply for IHDA down payment assistance as you look at homes for sale in Illinois.

What is IHDA?

IHDA stands for the Illinois Housing Development Authority. Select lenders like NewCastle Home Loans have partnered with IHDA to help make financing and home ownership easier in Illinois. When you apply for a mortgage with us, we’ll take care of qualifying you for IHDA assistance as well. Saving up for a down payment for a home is one of the biggest challenges home buyers face. If you qualify, IHDA grants make that easier.

In 1967, Illinois legislature created IHDA as a self-supporting agency to finance affordable housing across the state. IHDA does not use taxpayer dollars to sustain its operations, although it does administer publicly funded programs on behalf of the state. Since its creation, IHDA has provided more than $18 billion to finance more than a quarter million affordable homes.

 

What are the benefits of IHDA?

The primary benefit of IHDA is down payment assistance. Their most sought-after program is for a $7,500 grant reserved for Illinois first-time home-buyers who have not owned a home in the last three years or are a veteran of the United States military. There are five different programs IHDA currently offers but each has overlapping benefits such as:

  • 30-year fixed mortgage - All of the IHDA products are used with a 30-year fixed mortgage program. This means your loan payment will not change through the life of your mortgage. (Keep in mind, your taxes and hazard insurance may adjust periodically. While these are typically included in your mortgage payment, they are not actually included in your loan).
  • Can be used with Conventional, FHA, VA, or USDA home loan programs.
  • Competitive rates - IHDA publishes their rate daily, and our rates are always published through our Mortgage Calculator on our home page.
  • IHDA allows for as small as a 1% investment (down payment), which may cover your down payment and the sum of your closing costs.

ihda-ebook-guide-image

 

What are the five IHDA programs?

There are five different IHDA programs you could qualify for. However, 1st Home Illinois is the most sought after.

1st Home Illinois (changes effective Jan. 1, 2019)

  • Available in: Cook, Marion, St. Clair, and Winnebago counties.
    • Effective Jan. 1, 2019, will no longer be available in: Boon, DeKalb, Fulton, Kane, McHenry, or Will County.
  • $7,500 in assistance for down payment and closing costs.
  • Forgiven monthly over five years.
  • May be used to purchase one or two-unit properties.
  • Requirements:
    • Must be a first-time home buyer, veteran, or anyone who has not owned a home in the last three years.
    • Must be used for a primary residence purchase.
    • Meet the income requirements and purchase limits.
    • Minimum credit score of 640.
    • Minimum contribution of $1,000 or 1% of the purchase price, whichever is higher.
    • You must complete homeownership counseling prior to close (online and in-person options available).

IHDA Access Repayable

  • 10% of the purchase price up to $10,000 in assistance for down payment and 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 home buyers statewide.
  • Meet the household income and purchase price limits.
  • Minimum credit score of 640.
  • You must complete homeownership counseling prior to close (online and in-person options available).

IHDA Access Deferred

  • 5% of the purchase price up to $7,500 in assistance for down payment and 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 home-buyers statewide.
  • Meet the household income and purchase price limits.
  • Minimum credit score of 640.
  • You must complete homeownership counseling prior to close (online and in-person options available).

IHDA Access Forgivable

  • 4% of the purchase price up to $6,000 in assistance for down payment and 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 home-buyers statewide.
  • Meet the household income and purchase price limits.
  • Minimum credit score of 640.
  • You must complete homeownership counseling prior to close (online and in-person options available).

IHDA Refi

IHDA-new-income-limits-by-county

(Borrowed from IHDA)

 

What’s IHDA’s minimum down payment requirement?

The greater of 1% or $1,000 of the purchase price. For example:

$150,000 (purchase price) x .01 = $1,500

Borrowers who put down less than 20% are required to pay for mortgage insurance. However, this can be removed once the borrower’s equity in the property increases to 20%.

 

What do I need to do to qualify for IHDA?

Qualifying for IHDA assistance is fairly straightforward. If you want an in-depth look and how-to, make sure to download our free step-by-step guide to IHDA down payment assistance programs.

See the below for a breakdown of what you’ll need to do, consider, and the steps to apply:

  1. Apply and get pre-approved. It only takes 15 minutes.
  2. Consider the county you’re trying to purchase in. Make sure your household income is within the above limit. Household includes any adult member who produces an income in that household, even if they are not on the mortgage application.
  3. You’ll need to have your monthly Debt-to-Income (DTI) within 45% of your monthly income. This means if you make $5,000 gross-monthly-income (GMI), you’d need all of your debt + new mortgage to be under $2,250 monthly. If you’re close and need to take care of a bit, paying off smaller credit cards typically helps with this.
  4. All IHDA programs require a credit score above 640. If your credit is below this, you may still qualify for an FHA loan with 3.5% down instead. Paying off credit cards a month before you apply and keeping them paid off is a good way to help improve your credit before you apply.
  5. Depending on the program you qualify for, you’ll need at least 1% of the purchase price or $1,000, whichever is higher. IHDA will then cover a portion beyond this to be used towards your down payment or closing costs. When you use our Mortgage Calculator, we calculate your estimated payments and fees. Down payment + closing costs - IHDA assistance = Cash to close. Chat with us below to learn about additional assistance with lender/seller credits.
  6. Time to close! At NewCastle Home Loans, we close IHDA loans during our normal time frame. Once we have your completed loan application with all supporting documentation and you are pre-approved, we can close within 15 days after we receive the fully executed sales contract.

Keep in mind - our mortgage process is three times faster than the industry average. Our standards and efficiency will likely differ from other lenders. Before you choose a lender, make sure to do your research and talk to them about all the details and the average timeframe.

Click here for a breakdown of every IHDA program side by side, directly from IHDA.

 

How long does it take to close an IHDA mortgage?

When you’re looking at the time frame of how fast you can close on an IHDA mortgage, it all comes down to the quality of the lender you choose to go with and the efficiency of their processes.

The IHDA portion of the loan doesn’t actually add more processing time for the borrowers other than they are required to take a homeownership counseling class. That means you’re relying on the lender’s ability to move the process along and how quickly you can supply documentation.

At NewCastle Home Loans, we close IHDA loans during our normal time frame. Once we have your completed loan application with all supporting documentation and you are pre-approved, we can close within 15 days after we receive the fully executed sales contract date.

Keep in mind - our mortgage process is three times faster than the industry average. Our standards and efficiency will likely differ from other lenders. Before you choose a lender, make sure to do your research and talk to them about all the details and the average time frame.

 

That’s it! Are you ready to see if you qualify?

There you have it! Everything you need to know about IHDA down payment assistance. The only thing left for you to do is to check with one of our loan officers and to check your eligibility! Don’t let limited funds for a down payment stop you from owning a home. Call us at (855) 610-1112 or chat below and we’ll work with you to find the mortgage program to help you finance your home.

NewCastle Home Loans is a proud supporter and lending partner of IHDA. For more details on IHDA, download our free IHDA e-book.

Get the Complete Guide to IHDA

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