State and Federal Loan Programs

The following specialized mortgage loan programs can help prospective buyers get better financing. Your Illinois REALTOR® can provide you with mortgage information, discuss financing options and recommend loan sources – and may be able to help you find financing that suits your needs and helps get you into your new home!

• FHA Loans.
  Since 1934, mortgages insured through the Federal Housing Administration (FHA) have helped millions of people buy a home. Because FHA loans are insured by the federal government, they offer competitive interest rates and are an option for buyers with less than perfect credit. They have a low 3.5 percent down payment and, unlike conventional loans, that money can come from a family member, employer or charitable organization. FHA loans can be used to buy a home, finance repairs to an existing home or for seniors aged 62 or older, be used for a reverse mortgage. www.hud.gov/fha/choosefha.cfm

FHA loan limit increases to help homebuyers in Illinois. HUD published new 2009 FHA loan limits per the American Recovery and Reinvestment Act. Find the new 2009 loan limits for your area.

• USDA Illinois Guaranteed Rural Housing Loan.
  This program offers 100 percent financing with no monthly mortgage insurance, competitive fixed interest rates and expanded qualifying ratios of 29 percent and 41 percent. 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 Rural Development lenders. www.rurdev.usda.gov/IL/ 
   

• Finally Home.
  Formerly known as Our Own Home, this program was established by the Illinois State Treasurer’s Office in 2002 to help Illinois residents buy a home or keep their existing homes from going into foreclosure. It’s a free program that helps borrowers who cannot obtain conventional mortgages from credible lenders due to credit issues or a high debt-to-income ratio. The program can also help borrowers refinance a mortgage if they are facing an ARM reset or certain financial hardships defined by statute and show that that they will likely be able to continue or resume making payments. www.treasurer.il.gov/programs/finally-home/finally-home.aspx 
   

• I-Loan.
  The Illinois Housing Development Authority’s (IHDA) I-Loan Program offers a below-market, 30-year fixed-rate mortgage to help low- and moderate-income families and individuals become first-time homebuyers. Borrowers must be first-time buyers with income and purchase price not exceeding specified limits. Underwriting standards are standard conventional “affordable housing” standards as published by the major Private Mortgage Insurance (PMI) companies and Fannie Mae /Freddie Mac. www.ihda.org 
   

• Mortgage Credit Certificate.
  This program of the Illinois Housing Development Authority applies to first-time homebuyers or borrowers who have not owned a home in three years. The Mortgage Credit Certificate (MCC) allows up to 25 percent 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 good for the life of the loan. www.ihda.org 
   

• Rural Housing Initiative. This program of the Partnership for HomeOwnership foundation targets individuals/families with income at or below 65 percent of county median income as determined by the Illinois Housing Development Authority (IHDA). Applicants must be first-time homebuyers or not have owned a home within three years in rural Illinois counties. Cities of population less than 20,000 (or 10,000 outside a metro-statistical area are) are eligible. www.pfho.org
   

• AssetsIllinois. Launched in September 2007 by the Illinois Department of Human Services in cooperation with the Partnership for HomeOwnership, this program uses a state-sponsored matched savings program (Individual Development Accounts) which allows buyers 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. www.dhs.state.il.us/assets/