A Guide to Down Payment Assistance Programs
Saving up for a down payment can be an obstacle for many first-time homebuyers. You want to take advantage of the historically low mortgage rates. Still, rent, utilities, childcare, and other monthly expenses make it difficult to save up that 20% down payment that most lenders require.
According to the Homeownership Program Index, there are approximately 2,500 programs that offer down payment assistance. This financial help can significantly impact affording a home, yet many home buyers are unaware of these available programs.
Luckily, it is possible to achieve the dream of homeownership with little or no money down in today’s mortgage market. At Pacor Mortgage, we’re ready to help with low down payment programs that can put the dream of homeownership within your reach.
Here are some of our available programs:
IHDA Purchase Programs
The Illinois Housing Development Authority (IHDA) provides various options to assist homebuyers with a down payment or closing costs associated with purchasing a home in the State of Illinois. All Down Payment Assistance (DPA) programs must be used with an IHDA 30-year fixed-rate mortgage.
IHDAccess Forgivable. Available in any county in Illinois, the IHDAccess Forgivable program assists homebuyers looking for down payment assistance. This grant provides 4% (up to $6,000) of the home’s purchase price for a down payment or closing cost assistance, which is forgiven after ten years provided the buyer stays in the house.
IHDAccess Deferred. This program provides down payment or closing cost assistance that the individual must repay at the end of the loan and is available for all homebuyers. This grant offers 5% (up to $7,500) of the home’s purchase price in down payment or closing cost assistance, which is interest-free for the life of the loan. The loan must be repaid when the home is sold, refinanced, or the mortgage is paid off.
IHDAccess Repayable. IHDAccess Repayable provides down payment or closing cost assistance that the individual must repay over the first ten years of the mortgage and is available for all homebuyers. This grant offers 10% (up to $10,000) of the home’s purchase price in down payment or closing cost assistance, which is interest-free and repaid monthly.
With these IHDA programs, individuals must contribute $1,000 or 1% of the home’s purchase price (both new construction and existing homes are accepted). In addition, a credit score of 640 or higher is needed to qualify for the program.
USDA Loans
Part of the United States Department of Agriculture’s (USDA) Rural Development program, a USDA Loan is a specialized mortgage program for low- to moderate-income individuals purchasing existing homes or new homes in rural areas. Unlike many traditional mortgages, a down payment and minimum credit score are not required. However, a USDA loan carries specific income requirements; household income cannot exceed 115% of the median household income in your area, and the monthly payment should be less than 34% of your household’s gross income. Additionally, those who receive 100% financing through a USDA loan must pay an annual guarantee fee.
Chicago Infrastructure Trust Grant Program
The Home Buyer Assistance Program, administered by Chicago Infrastructure Trust, is open to individuals and families buying a home or refinancing an existing mortgage. Qualified homebuyers may receive a grant for up to 7% of the total loan for down payment or closing costs, the amount based on income. In addition, individuals must contribute $1,000 or 1% of the home’s purchase price; new construction, existing and multi-family homes are accepted.
Income and credit requirements vary based on the type of loan. For Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or USDA loans, the individual’s annual income must be$88,435 or less and need a minimum credit score of 580. For Fannie Mae/Freddie Mac Loans, the individual’s yearly income must be $131,775 or less and require a minimum credit score of 640.
Getting pre-approved for a mortgage is easy when you partner with Pacor Mortgage. For 35 years, our expert real estate team has helped aspiring homeowners like you navigate the challenging and constantly changing real estate market. We would be honored to help get you in the home of your dreams. Visit our website or call us at 773-881-7744 for more details on our current programs!
