What to know about buying a house in Illinois
First-time home buyers in the state of Illinois are fortunate in many respects. For example, they can access special mortgage programs, educational courses, and counselors to guide them through the process.
Best of all, some buyers may be in line for a cash grant or an interest-free loan from one of the many down payment assistance programs in Illinois. This could help cover your down payment and closing costs and put you in a home much sooner than you thought possible. Here’s what you can expect.
In this article (Skip to ...)
- IL home buyer overview
- Home loan options
- IL home buyer programs
- First-time buyer grants
- Buying in Illinois’ cities
- IL mortgage rates
Illinois home buyer overview
The median home sales price in Illinois was $234,000 in January 2023. That was a 1.5% decrease from the prior year, according to Illinois Realtors.
However, the annual median home price throughout the Prairie State was $260,000 in 2022. This translates to an overall 4% gain compared to $250,000 in 2021.
Nonetheless, people looking to make their first home purchase may find saving enough for a down payment challenging. Thankfully, plenty of home buyer assistance and other incentives are available to first-time home buyers in Illinois.
Illinois home buyer stats
|Average Home Sale Price in Illinois1||$234,000|
|Minimum Down Payment in Illinois (3%)||$7,020|
|20% Down Payment in Illinois||$46,800|
|Average Credit Score in Illinois2||719|
|Maximum Illinois Home Buyer Grant3||Up to 7% of purchase price as a grant in Aurora, Joliet and several other communities|
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.
First-time home buyer loans in Illinois
If you’re a first-time home buyer in Illinois with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).
Of course, few first-time buyers have saved enough for 20% down. But the good news is, you don’t need that much. Not by a long shot. Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:
- Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans, active military members, reservists, and National Guard. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
- USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
- IHDA Mortgage: May include competitive interest rates and can be used with down payment assistance and tax-efficient mortgage credit certificates. More information below
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on your mortgage loan, you could potentially get into a new house with minimal cash out of pocket.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.
Illinois first-time home buyer programs
The Illinois Housing Development Authority (IHDA) has a division called IHDA Mortgage that provides a range of home buyer assistance programs. Eligible home buyers can opt for a 30-year fixed-rate mortgage with options for down payment and closing cost assistance of up to $10,000.
The IHDA Mortgage offers a 30-year loan that is compatible with government-backed and conventional mortgages. Each IHDA Mortgage comes paired with one of several down payment assistance programs. We provide more detail about these options in the next section.
Visit the IHDA Mortgage website for a series of very user-friendly guides to what’s available. As with almost every similar home buyer loan program, there are some conditions:
- You have to choose a participating lender from the IHDA’s list
- You must complete a homebuyer education course to qualify
- Your credit score must be 640 or higher
- You must meet both income and purchase price limits
You may be able to get a Mortgage Credit Certificate (MCC) with these loans, which might save you money on your federal taxes. But speak to a tax adviser to see if one will help you.
Illinois first-time home buyer grants
IHDA Mortgage provides a range of down payment assistance programs for eligible borrowers. Cash assistance maxes out at $10,000 or 10% of the purchase price, whichever is lower. These programs are second mortgages rather than grants.
The Opening Doors program provides up to $6,000 worth of assistance for down payment and closing costs. This is a forgivable loan with no monthly payments. But the grant money must be paid back if the home is sold or refinanced within the first five years of the loan term.
IHD Access Forgivable
This program offers up to 4% of the loan amount with a maximum of $6,000. This is a second mortgage that’s forgiven over 10 years. If you stay in the home that long, you won’t have to repay a cent. But you’ll have to repay the loan when selling the home or refinancing the mortgage before the loan term is up.
IHD Access Deferred
Illinois home buyers can receive up to 5% of their loan amount with a maximum of $7,500. Your loan balance comes due only when you refinance, sell the home, or pay off your primary mortgage. There’s zero interest on this loan.
IHD Access Repayable
This repayable second mortgage offers up to 10% of the loan amount with a $10,000 limit. This interest-free loan is paid off over 10 years, with monthly payments at 0% interest.
IHDA occasionally offers a program called SmartBuy. When available, this can help first-time home buyers who want to purchase a home but have large student loan payments.
Via SmartBuy, you could qualify for $5,000 in down payment assistance and 15% of your purchase price (up to $40,000) toward student loans.
SmartBuy has been closed for new locks as of May 2022. However, the program could be restored when new funding is allocated.
Eligibility for Illinois home buyer assistance programs
Like the IHDA Mortgage program, all these DPA options require a 640 credit score and a completed homeownership education course. You must also use one of the following mortgage programs for your first mortgage:
- FHA, VA, or USDA loan
- Conforming loan
- Freddie Mac HFA Advantage loan
Additionally, income limits and purchase price limits apply. Many loan programs base their income limits on the area median income (AMI). You can look up your county’s limits by using HUD’s median income family lookup tool.
Of course, don’t feel that you have to go with IHDA Mortgage. Many counties, cities, and towns in Illinois offer their own programs (see below). Compare those — and any others you come across — with this statewide program. Choose the one that suits you best.
In particular, check to see if the community where you’re buying is one of the many where the Illinois Assist Homeownership Program operates.
Buying a home in Illinois’ major cities
Unsurprisingly, Chicago has the highest home prices of Illinois’ big-three cities. But as of February 2023, home price inflation in Aurora and Joliet are both outpacing the Windy City. So at least Chicago home buyers aren’t dealing with the sky-high inflation seen in those two cities.
Chicago first-time home buyers
The median list price in Chicago was $335,000 in February 2023. That was flat year over year, according to Realtor.com.
At that median price, your down payment options might fall between:
- $10,050 for 3% down payment
- $67,000 for 20% down payment
The City of Chicago has several programs to assist first-time buyers. However, its website provides only limited information.
It says: “We will send you a ‘Home Ownership Kit’ with information on home ownership programs if you provide your name, address and ZIP code and daytime telephone number. The information on each program lets you know what steps to take next if you wish to participate in the program.”
To request your kit, click the “Get Started Online” button on this City of Chicago webpage. You can also get more information by calling (312) 744-0281.
Aurora first-time home buyers
The median list price in Aurora was $297,000 in February 2023. That was up 14.3% year over year, according to Realtor.com.
At that median price, your down payment options might fall between:
- $8,910 for 3% down payment
- $59,400 for 20% down payment
The City of Aurora provides up to $3,000 in DPA for most eligible home buyers, rising to $5,000 if you’re buying in a Neighborhood Revitalization Strategy Area (NRSA). However, to qualify, your household income cannot exceed 80% of the Area Median Family Income. That was $83,350 for a four-person household in 2022.
You must also commit to living in the home and maintaining it well for at least three years.
The City of Aurora is among the communities listed as eligible for the Illinois Assist Homeownership Program. This appears to offer generous grants (meaning you don’t have to repay the money) and reduced monthly mortgage payments. Click that link to see if you qualify. And, if you do, you may have found your best option.
Joliet first-time home buyers
The median list price in Joliet was $270,000 in February 2023. That was up 3.9% year over year, according to Realtor.com.
At that median price, your down payment options might fall between:
- $8,100 for 3% down payment
- $54,000 for 20% down payment
The City of Joliet website has details of the Illinois Assist Homeownership Program. That pays a 3% to 7% cash grant to qualifying home buyers to fund closing costs and down payment assistance. And, because it’s a grant, you don’t have to repay it.
Click the program’s link in the resource section to see if you are eligible. If you are, you might have found your ideal program.
Where to find home buying help in Illinois
All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Illinois or their local area.
In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists for statewide, regional, and local resources.
Statewide and regional first-time home buyer resources in Illinois
- Some communities use HUD’s HOME Investment Partnership Program to assist first-time home buyers. Find your local HOME program contacts
- Illinois Housing Development Authority: IHDA helps people with homeownership through mortgage loans, repair grants, and foreclosure prevention assistance, as well as supporting multifamily rental housing and community building
- Housing counseling agencies: Contact a HUD-approved housing counseling agency for free or low-cost counseling services for buying, renting, defaults, foreclosures, credit issues, and reverse mortgages. A housing counselor can help connect you with homeownership assistance programs specific to your community. Search for a HUD-approved housing counseling agency here
- IL Housing Search Housing Resources
- Illinois Department of Commerce and Economic Opportunity: Housing assistance
- Housing Action Illinois: Resources for homeowners
- SmartBuy Program: Down payment assistance and student loan relief to help purchase a home
- Illinois Assist Homeownership Program
Illinois home buyer resources by city/town
- Community Housing Association of DuPage
- City of Chicago, Department of Housing: Offers a number of programs and services to prospective home buyers and homeowners in the city of Chicago
- Community Partners for Affordable Housing (Lake County)
- Village of Oak Park Housing Programs
- Cook County Home Advantage Program
- City of Chicago
- City of Aurora
You can also find home buyer resources and contact information for specific cities on HUD’s Illinois first-time home buyer page.
What are today’s mortgage rates in Illinois?
You can see today’s live mortgage rates in Illinois here.
When you’re ready to start the home buying process, experiment with a mortgage calculator to see how down payment and interest rates will affect your mortgage payment. Then, get personalized rate quotes from at least three to five mortgage lenders.
Don’t just look at advertised rates online. Apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.
1Source: Illinois Realtors Monthly Housing Market Report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state's available DPA grants at the time this was written