Illinois First-Time Home Buyer Programs and Grants of 2022

Key Takeaways:

• Resources available in Illinois provide valuable support to first-time home buyers
• Programs help new home buyers afford down payment and closing costs
• Illinois offers several options for home buyers in specific cities, counties and throughout the state 
• Buyers must meet certain criteria in order to take advantage of these programs

When you decide to buy a home for the first time, a lot goes into planning and saving. If you are considering buying a new home in the state of Illinois, you can tap into financial assistance programs and grants specifically for the state.

Illinois First-Time Home Buyer Programs

The primary resource for home buyers in the state of Illinois is the Illinois Housing Development Authority (IHDA). The mission of the IHDA is to “finance the creation and preservation of affordable housing in Illinois.” The state government agency provides financing programs by forming partnerships with local governments, lenders, developers and community organizations.

Their programs for first-time buyers provide extra support needed during the home buying process. By utilizing these resources, the IHDA can help make your home ownership dream a reality.

IHDAccess Mortgage Program

Lining up funds for down payment or closing costs can be challenging, especially when your savings fall short. The IHDAccess program offers three different options for buyers who need help with these up-front costs:

• IHDAccess Forgivable
• IHDAccess Deferred
• IHDAccess Repayable

These loan programs offer a 30-year mortgage plan with an affordable fixed-rate interest. They are available for all mortgage types including Federal Housing Administration (FHA) loans, Veterans Affair (VA) loans, United States Department of Agriculture (USDA) loans and Fannie Mae Housing Finance Agency (FNMA HFA) loans.

All three of the IHDAccess programs have overall requirements in common.

Eligibility Details:

• First-time or repeat home buyers can apply
• Minimum credit score of 640 required
• Must meet household income and property price limits, which vary by county
• Buyer contribution of $1,000 or 1% of the purchase price (whichever is greater)
• Must complete homeownership counseling
• Can be used for new construction or existing homes
• Property must be primary residence

IHDAccess Forgivable

The IHDAccess Forgivable Mortgage program is a great option for first-time home buyers who are looking for help with funds for down payment and closing costs. The program gives you 4% of the property price (up to a maximum of $6,000). The funds are forgiven monthly (hence, the name “Forgivable”) over a period of 10 years, meaning the loan does not have to be repaid.

IHDAccess Deferred

The IHDAccess Deferred Mortgage program is another option that can assist you with down payment and closing costs. This program offers an interest-free loan of 5% of the purchase property price (a maximum of up to $7,500) to be used towards down payment and closing costs. The loan is deferred for the length of the mortgage, meaning it does not have to be repaid until you pay off the full mortgage, sell the home or refinance.

IHDAccess Repayable

IHDAccess Repayable provides even more funding for down payment and closing costs. This program offers 10% of the purchase price (up to a maximum of $10,000) as an interest-free loan which must be repaid over 10 years.

1stHome Illinois

The 1stHome Illinois program is geared toward first-time home buyers and is a helpful option for buyers looking for homes specifically in Cook, Marion, Winnebago and St. Clair counties. This loan program offers a grant of $7,500 to put toward down payment or closing costs. The up-side of this program is that if you live in the house for at least five years, the funds do not need to be repaid.

This program provides a 30-year mortgage plan with a competitive fixed-rate interest and is available for FHA, VA, USDA or FNMA HFA loans.

Eligibility Details:

• First-time home buyers, veterans or repeat buyers who have not owned a home in the past 3 years can apply
• Property must be a one or two unit home in Cook, Marion, St. Clair or Winnebago counties
• Must meet credit requirements
• Must meet household income and property price limits, which vary by county
• Buyer contribution of $1,000 or 1% of the purchase price (whichever is greater)
• Must complete homeownership counseling
• Property must be an existing home (no new construction)
• Property must be primary residence

Chicago First-Time Home Buyer Assistance Programs

For those who are first-time home buyers in Chicago, the city’s Department of Housing (DOH) offers programs that can provide cost-saving loans and grants, especially for home buyers with low to moderate incomes.

Community Connections Home Buyer Assistance Program provides funding to eligible city workers, career service employees, police officers, fire fighters and paramedics in the city of Chicago. Income limits and restrictions on property location within the city apply. Interest-free loans up to $30,000 are available and are forgiven after 10 years of living in the property as a primary residence.

Down Payment Plus Program, offered by the Federal Home Loan Bank of Chicago, provides forgivable grants for low- to moderate-income home buyers. Grants up to $6,000 can be used for down payment and closing costs.

Other Illinois Programs

Additional resources can be found at the local level from individual cities and counties. Location specific home buyer programs in Illinois include:

• Madison County HOMEbuyer Program, which offers 5-year interest-free, forgivable loans to put towards down payment and closing costs.
• Kane County First-Time Home Buyer Loan Program, which provides interest-free, deferred-payment loans up to $10,000 to put towards down payment and closing costs.

Getting Started

Decide on a Location

As you begin your home-buying journey, consider the county and location where you want to live. Most IHDA programs are available for properties throughout the entire state, while some are specific to certain cities or counties. As you can see above, some individual cities and counties may also offer loan and grant programs. Once you narrow down your location choices, you can focus on programs that are available for your area.

Begin Homeownership Counseling

The IHDA and local agencies require all first-time buyers in Illinois to complete pre-purchase counseling. A counselor will help you identify your readiness in purchasing a home and share tips and insights into the duties and financial responsibilities that come with being a homeowner.

IHDA provides a handy tool to search for a counselor. Even if you are not ready to begin house hunting quite yet, getting started with a counselor can help prepare you for the next steps.

Find a Lender

IHDA does not finance home buyers directly. They do, however, coordinate with approved mortgage lenders and can help you search for a lender. Different lenders offer different interest rates, terms and requirements for eligibility. Additional costs, like private mortgage insurance (PMI), will affect your monthly mortgage payment.

A good lender will explain the costs and terms and help you understand the many different options available.

Choose the Best Home Buyer Program for You Today!

The resources available in Illinois can provide valuable support to new home buyers throughout the state. The IHDA offers extensive support in the form of loans, grants, lender recommendations and guidance for first-time buyers. Individual cities and counties also offer cost-saving loans and grants to qualifying home buyers.

These programs can save buyers thousands of dollars in down payment and closing costs. Take advantage of these valuable resources as you search for your new home in Illinois.