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If you want to buy a home in Illinois but need financial help to cover the down payment and closing costs, a first-time home buyer grant might provide the boost you need. Agencies and local governments scattered across Illinois offer financial assistance for home buyers.
What is a first-time home buyer grant?
A grant is a gift of money to make it easier to pay the thousands of dollars needed for a down payment and loan closing costs. Consequently, the financial assistance helps more people become homeowners. Some gifts never have to be repaid, while others are forgivable loans that are repaid when you refinance or sell the home.
Each program has its own eligibility terms and conditions. Many require you to:
Occupy the home as a primary residence.
Have a low to moderate income.
Buy within purchase price limits.
Put up your own money, often $1,000 or 1% of the home's price.
Buy in a specific geographic location.
Take home buyer classes or participate in housing counseling.
Here's NerdWallet's guide to help you find first-time home buyer grants and other assistance in Illinois.
First-time home buyer grants available across Illinois
The first three programs on this list are offered by the Illinois Housing Development Authority, or IHDA. The last is administered by the Federal Home Loan Bank of Chicago, which operates statewide. With the exception of 1stHomeIllinois, all are open to repeat as well as first-time buyers.
This program gives 4% of the home’s purchase price, capped at $6,000, for down payment and closing costs. The assistance isn't repaid if you keep the loan for at least 10 years.
Home buyers take out an interest-free loan of 5% of the purchase price, up to $7,500, to help with a down payment and closing costs. The loan must be repaid when the buyer sells the home, refinances the mortgage or finishes making payments.
This state program offers a $7,500 grant toward a down payment and closing costs on a property in Cook, Marion, St. Clair and Winnebago counties. As the name implies, 1stHomeIllinois is available only to first-time home buyers, defined as anyone who has not owned a home in the past three years. The program exempts veterans and applicants buying a property in a targeted area from the first-time requirement.
These programs, administered by the Federal Home Loan Bank of Chicago, offer up to $6,000 in down payment and closing-cost assistance. Grants are forgiven over a five-year period. Buyers must use a lender that's a member of FHLB Chicago or, in the case of the Advantage program, from a nonprofit organization. Borrowers must complete a home buyer education course as well as counseling. Buyers using the program must contribute at least $1,000 to the home purchase.
Grant programs in Chicagoland
Wintrust Mortgage, through nonprofit partners, offers grants of up to $2,000 for first-time home buyers in Cook, DuPage, McHenry, Will, Kane and Lake counties. Buyers must contribute at least $1,000 in personal funds toward the home purchase and complete a home buyer counseling program. The grants are limited to buyers of one- to two-unit properties who make it their primary residence.
The Joliet Down Payment Assistance Program offers grants of up to 20% of the home's purchase price. The program, in cooperation with the Will County Center for Community Concerns, is open to low-income applicants buying a principal residence within the Joliet city limits. The assistance is in the form of a zero-interest, forgivable loan. Buyers must contribute at least $2,500 toward the purchase.
First-time home buyers may receive up to $10,000 in down payment and closing cost assistance. The aid is an interest-free loan that must be repaid when the home is sold, the title is transferred or the property is no longer the borrower's principal residence. Buyers must live or work full-time in the Kane-Elgin Consortium Area; other residency restrictions apply. Buyers must contribute at least 1% of the down payment and complete a home buyer education course.
The Kankakee Homebuyer Incentive Program, or KHIP, offers $2,500 grants on a first-come, first-served basis for residents buying a home within Kankakee city limits. The grants are for low- to moderate-income households or families buying homes in low- to moderate-income census tracts. Applicants are required to complete a home buyer education course.
First-time home buyers in Lake County can receive down payment assistance of up to 5% of the purchase price from the Affordable Housing Corporation of Lake County. A home buyer education course and counseling are required. The help comes in the form of a no-interest loan with no monthly payments that is forgiven after a little over five years. If the home is sold before then, the loan must be partially repaid.
Grant programs in Cook County and Chicago
NeighborhoodLIFT is a national down payment assistance program sponsored by the Wells Fargo Housing Foundation and Neighborworks America. In Cook County and Chicago, it is administered by Neighborhood Housing Services of Chicago. The program gives grants of up to $17,500 for qualified home buyers. Funds are limited and available on a first-come, first-served basis for the purchase of a primary residence in Cook County.
The city of Chicago offers grants of up to 7% of the loan amount to help offset down payment and closing costs. First-time home buyers who apply for assistance are required to take an eight-hour home buyer education course. Borrowers must contribute $1,000 or 1% of the purchase price, whichever is less. If the home is sold or the mortgage is refinanced within the first five years, the grant must be partially repaid. The property must be in Chicago.
Grant programs in northern Illinois
The city of Rockford offers down payment assistance of up to $14,999 for people buying a home within the city limits. Buyers must live in the home for at least six years. Borrowers are subject to income limits as well as home price limits and must complete a housing counseling class. Buyers must pay at least $250 toward the cost of the home.
Grant programs in central Illinois
The town of Normal offers five-year, forgivable loans of up to $3,000 to help with a down payment and closing costs.
The loans aren't limited to first-time home buyers, but income limits apply. Homes must be owner-occupied; mobile homes don't qualify.
Grant programs in Metro East Illinois
Five-year, forgivable loans for a down payment and closing costs are available on a first-time, first-served basis. Buyers who meet the program definition of "very low-income" can get up to $5,000.
The Madison County Community Development Department offers five-year, forgivable loans of up to $5,000 to pay for down payments and closing costs.
The program is limited to low- to moderate-income households.
Your next step
If one or more of these programs look like they're right for you, contact the program administrator to get the complete story on eligibility requirements, any income and purchase price limits, and whether there are preferred lenders. The administrator can tell you how to satisfy any home buyer education or counseling requirements. These agencies and nonprofits exist to serve you, so ask as many questions as you need to.
» MORE: Best IHDA mortgage lenders
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