Loan Programs

Specialized loan programs can help prospective buyers get better financing. Click on the links to find out more about these loan programs:

• Partnership for HomeOwnership: PFHO assists cities and community groups in the development of affordable housing programs. 

  • The Illinois Association of REALTORS (IAR), the Partnership for HomeOwnership Inc. (PFHO, a non-profit foundation of the Association), along with the Illinois Housing Development Authority (IHDA), the Mortgage Guaranty Insurance Corporation (MGIC), and the Chicago Federal Home Loan Bank (FHLB) offer the HomePower Mortgage Assistance Program, targeting individuals and families with income at or below 80 percent of the Cook County median income. Applicants must be first-time homebuyers or not have owned a home within three years. In the initial phase, the program will serve over 30 communities in Cook County.

  • Educate students about credit, finance, and home ownership: www.credit-power.org
     

• AssetIllinois. This new program launched in September 2007 by the Illinois Department of Human Services in cooperation with the Partnership for HomeOwnership will create 850 first time homeowners across the state using a state-sponsored matched savings program called Individual Development Accounts which will allow them to save up to $2,000 to purchase a first home. Upon completion of the program and required financial and homeownership education, participants will receive a $2,000 match toward their first home.
   

• USDA Illinois Guaranteed Rural Housing Loan: It offers 100% financing with no monthly mortgage insurance, competitive fixed interest rates, and expanded qualifying ratios of 29% and 41%. There is a one-time guarantee fee that may be rolled into the loan at close regardless of the appraised value. Existing dwellings or new construction properties qualify when located in eligible rural areas. This program is NOT just for first time buyers. Applicants may apply with local approved RD lenders.
   

• FHA Loan:The Federal Housing Authority offers a single-family low downpayment loan, which allows wider debt ratios of 41%. By comparison, conventional total debt ratios usually range between 36% and 38%. The entire downpayment can be a gift, closing costs can be financed, and the seller can assist with that cost. However, the borrower must have 3% of the purchase price invested in the transaction. Unfortunately, FHA mortgage insurance is paid over the life of the loan. However, this is a good loan for those borrowers with little down payment savings.
   

• FHASecure. Launched Aug. 31, 2007, the FHASecure program was launched by the Federal Housing Administration to help homeowners avoid foreclosure. The program will allow families with strong credit histories who had been making timely mortgage payments before their loan reset but are now in default to qualify for refinancing.
   

• VA Loan: The Veterans Administration loans are often made without any downpayment at all. These loans also allow wider debt ratios of 41%. The veteran's certificate of eligibility must be available at the time of the loan application. If the veteran has had a previous VA loan that was assumed by a non-veteran, his/her eligibility amount will be reduced by that amount. If the prior loan was paid off, his/her eligibility returns to the full amount. Read more about the Home Loan Guaranty Program.
   

• Illinois Housing Development Authority (IHDA) First Time Home Buyer Program:
   

  • IHDA offers a lower-than-market rate down payment to first-time borrowers or those who have not owned a home in three years. Often IHDA offers very low interest rates and closing cost assistance with loan programs targeted to specific lower income families. These programs run at different times in different locations. Check their Web site for more information.

  • IHDA also offers Mortgage Credit Certificates for first-time homebuyers or borrowers who have not owned a home in three years. This certificate allows up to 25% of the mortgage interest (up to $2,000) to be claimed as an IRS tax credit. This can be an immediate benefit by filing a revised W-4 withholding (more take-home pay) or as a tax refund at the end of the year. This certificate must be applied for at the time of loan application and can be used with any FHA, VA, RD or conventional loan, allowing the borrower to qualify for a more expensive home, and it is good for the life of the loan.

IHDA has a nine-year recapture (peaking in the fourth or fifth year) with both of these programs, if the property is sold within that time frame. However, the borrower's income and the property appreciation would have to exceed those as stated in an IHDA chart showing that nine-year period. After nine years, recapture does not apply.

• IHDA I-Loan Program offers a below market, 30-year fixed rate mortgages to help low and moderate income families and individuals become first-time homebuyers. Learn more.  
• IHDA I-Loan 40 Program offers below-market, 40-year fixed rate mortgages to help low and moderate income families become first-time homebuyers.

Our Own Home: A program of the Illinois State Treasurer’s Office that helps people purchase their first home, or refinance if payments have been missed due to circumstances beyond the homeowner’s control. Through Our Own Home, the State Treasurer’s Office guarantees 10% of the loan value to the financial institution as security for the loan. Applicants must be unable to qualify for a conventional mortgage and have an annual household income of $75,000 or less. The program is free for both the lender and the borrower.