• The Mindset of Home Buying and Mortgage Planning
• Mortgage Instruments, Arbitrage and Leveraging - The Impact
• Real Estate Taxation
• Economics and Interest Rate Movement
• When to Lock or Float
• APR Realities
• Concessions - How and When to Use Them
• Municipality Incentives - City of Chicago Program Awareness (tax smart, city bond etc)
  
• The Approval Process
• Overcoming Challenges (i.e.; Credit, Chain of Title, Warrantability, etc.)
• What You'll Need to Get Started

FIRST TIME HOME BUYER MORTGAGE LOAN GUIDELINES

The challenge is sorting through the overlap of "first time home buyer" programs available.  A first time home buyer is defined as anyone who has not owned a residential primary residence within the past 3 years.  An individual could have owned 10 homes prior to his or her 3 year stint of renting...or derive current earned income from investment property... and still qualify for a first time home buyer status.  Most programs for first time buyers are designed for low to no down payment, have higher than average debt acceptance and ratio requirements, have a percentage of median average income restriction and require purchasing a primary residence (occasionally FTHB status is waived if purchase is within specific zoning or census tract areas).  Also, the majority of 100% financing (no money down) loan programs are available for anyone and not just borrowers defined as "first time home buyers".  The primary differences in first time home buyer programs and others is the ability to obtain special mortgage financing incentives i.e., earned income tax credits, free grant monies to subsidize costs and reduced rates for standard mortgage insurance.

See the list of local programs below and visit our City of Chicago Programs page.

ENGAGED / NEWLYWED HOME BUYER INCENTIVES

Congratulations to both of you!

Being a recently engaged or newlywed couple, your new life is just beginning (or beginning again) together as a team.  Your first home together is an absolute priority and it's my job to create a fantastic home buying experience for both of you - first timers or not.  Being an industry expert and being married,  my team and I have the inside scoop on how to take full advantage of what the market provides.

Obtaining mortgage financing is easier than you think, despite the credit and liquidity markets currently.  Many first time home buyer and 100% financing options are available (no money down).  Still, many home buyers would prefer to make a down payment on their new home or have some additional funds in reserve for whatever arises.  Although not necessary, a down payment will provide access to a greater variety of loan program options and lessen the cost of borrowing overall (due to several factors).

We have a very special program for newlywed or engaged couples.  We have exclusively developed a plan whereby your wedding guests can contribute directly to the down-payment of your new home... subsidize any closing costs... or discount the loan payment for a couple of years.  Isn't that fantastic?  Do you think your friends and family would give a little extra if they knew their money was going towards your first home purchase?  You better believe they will!

Here's the cherry on top.  We just have to keep giving and giving!

• A wedding gift to you to match contributions tiered accordingly:

        Up to $1,000 down at closing - $200

        $1,001 to $4,000 down at closing - $350

        Over $4,001 at closing - $500

• We can send your guests our registry card explaining the program (or include our registry card in with your invitations to send out yourself)!
• We can send a thank-you card to your guests that includes a photo of you and your new home!

List of Local Chicago Home Buyer Programs:

Chicago City Mortgage Program  (temporarily discontinued) - The City Mortgage Program provides first-time homebuyers apply for a low-interest mortgage through the City Mortgage Program. This program provides mortgage financing and gift assistance to qualified buyers of owner-occupied residential properties. The assistance is equal to 4% of the mortgage amount and must be used to pay closing costs or as down payment assistance. Applicants for the City Mortgage program must be first-time home buyers. Non first-time home buyers are also eligible if they purchase a home in a designated target area.  See our City of Chicago Program Page for details.

Chicago TaxSmart Mortgage Program  TaxSmart is a Mortgage Credit Certificate (MCC) program which entitles first-time home buyers to a federal income tax credit. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive an MCC to reduce income taxes by an amount equal to 20% of the interest paid on a mortgage. The tax credit is available each year the home buyer continues to live in a home financed under this program. Must be a First Time Home Buyer. Non first-time home buyers are also eligible if they purchase a home in a designated target area. The program is intended to benefit low- and moderate-income households.  See our City of Chicago Program Page for details. 

Chicago Location Efficient Mortages  The Location Efficient Mortgage (LEM) is a mortgage that helps people become homeowners in location efficient communities. These are convenient neighborhoods in which residents can walk from their homes to stores, schools, recreation, and public transportation. People who live in location efficient communities have less need to drive, which allows them to save money and improves the environment for everyone. Call: The Center for Neighborhood Technology Dave Chandler (773) 278-4800, ext. 123

Chicago New Homes for Chicago  The New Homes for Chicago program is an affordable homeownership initiative offered by Mayor Richard M. Daley through the City of Chicago's Department of Housing to create homeownership opportunities for city residents. Now in its eleventh year, the City's New Homes for Chicago program has approved over 65 developments, or over 1,600 new affordable single-family or two-flat homes, which are either completed or in process throughout Chicago.   

Chicago Partnership for Affordable Neighborhoods  CPAN (now obsolete), a partnership between the City of Chicago and developers, is a tool to ensure opportunities for affordable condominiums and single family homes in market rate developments, particularly in appreciating neighborhoods, through two steps: a developer write-down and possible purchase price assistance to homebuyers.  Participating developers reduce the purchase price to an affordable level on a percentage of the units in a market-rate development. The difference between the market value and the affordable price is recaptured as a junior mortgage, assigned to the Chicago Low-Income Housing Trust Fund. See URL for more Eligible purchasers will include families with income ranges up to 100% of the area median who are either first-time homebuyers or who have not owned a home within the past three years. 

Chicago Neighborhood Lending Program  Through the Neighborhood Lending Program, the City of Chicago and Neighborhood Housing Services (NHS), provide first and second mortgage loans for the purchase and purchase - rehab of 1 - 4 units for homeowners who might otherwise not be able to purchase a home.  Subsidy resources are also available to eligible households to complement mortgage loans.  Program eligibility will be determined by NHS based on annual gross household income. A minimum of 60% of subsidy funds will be provided to households under 80% of area median income.  That's about $45,200 for a family of four.

IHDA First-time homebuyer program  IHDA helps low and moderate income families become first time homeowners. We fulfill this important mission through a number of initiatives and programs.

IHDA H.E.L.P. Home Equity Loan Program  IHDA H.E.L.P. offers qualified first time homebuyers 4.25% of the purchase price of a house as a gift which can be used for the 3% downpayment and the 1.25% for the origination fee. The interest rate for this loan program is currently at 6.5%. (RATES ARE SUBJECT TO CHANGE AT ANY TIME.)

IHDA Mortgage I-Loan Certificate (MCC)  The I-Loan Certificate (Mortgage Credit Certificate, a.k.a. MCC) allows first-time homebuyers to receive a dollar for dollar reduction in federal income taxes of 25 percent of their mortgage interest. This reduction is in addition to the standard income tax deduction available when purchasing a home. Please keep in mind that the I-Loan Certificate is not a loan in and of itself. It is a tax credit.

NHS: Mortgage and Purchase/Rehab loan program  A 30-year fixed-rate first mortgage for 80% of the total project cost (purchase price plus rehab, closing and soft costs).  Customers using the NHS first mortgage loan can qualify for NHS™ Gap Financing (below) and do not have to purchase Private Mortgage Insurance.  Special consideration is given to the rental income for a two- to four-unit building.  Minimal down payment requirements: from 1 to 5% of either the purchase price (if there is no rehabilitation required) or the total project cost.  Licensed, insured contractors must perform all rehabilitation work and an NHS construction specialist will monitor the construction process.  Some income and neighborhood eligibility requirements apply. 

NHS: Gap Loans  NHS offers first time Homebuyers a loan that combines with their down payment and is used for the purchase and - or rehabilitation of an eligible home. Gap loans are second mortgages at the same rate as the primary NHS mortgage.

Oak Park: Homebuyer assistance  Four programs for first time buyers are offered through the Village's tax exempt bonding authority and available through participating lending institutions. The Illinois Housing Development Authority (IHDA) administers three programs, and a private firm ministers the fourth. Funds usually become available for these programs in April or May, and are offered on a first-come, first-served basis. Homes purchased must fall within prescribed purchase price limits, and the purchasing household's income must fall within a prescribed maximum. The purchaser must not have owned a home in the prior three years, must have sufficient income to support a mortgage payment (as determined by the lender), and must attend two homebuyer counseling sessions.  

Will County FirstHome Program  FirstHome is a first time home buyer program for economically challenged households in Will County who have maximized their household working hours but remain unable to purchase a home.  FirstHome is designed to help close the gap between income and houing affordability in Will County for full-time working households who are projected to be at or under 70% of the area median income for the upcoming 12 months.  

Aurora- Real Estate Transfer Tax Rebate  For participants in the Assist Program or the Mortgage Credit Certificate (MCC) Program who purchase property in one of the City's targeted neighborhoods, the City will refund its portion of the real estate transfer tax to the buyer. This is a seller expense but a buyer's benefit, and it averages around $200 after closing. Contact DNR at 264-8280 for information on what supporting documents need to be submitted in order to receive the benefit. 

Aurora- Assist Program  The Assist Program gives first-time homebuyers the opportunity to buy a home by providing a lower-rate interest plus monies available for down payment and - or closing cost assistance. Call Department of Neighborhood Redevelopment for a list of participating lenders. Call DNR for a list of participating lenders.

Aurora- Mortgage Credit Certificate Program  The Mortgage Credit Certificate Program provides first-time homebuyers with a credit on their income taxes equal to one-fourth of the interest paid in each year for the life of the mortgage. Maximum annual credit is 2,000.   

HUD- Cities that offer homebuying assistance programs  The cities listed on URL below offer various incentives for Homebuying. Contact the city for details. (see URL)   

HUD- Public Housing Vouchers for Homeownership  This is a new program, which if adopted by local Housing Authorities, allows tenants with Housing Choice Vouchers, to use those vouchers to buy a home. These are the Housing Authorities in Illinois, which are participating in the program. There will be more in the future. Rock Island Housing Authority DuPage Housing Authority Chicago Housing Authority Rockford Housing Authority For more information, contact the Housing Authority in your community to see if they are making plans to use Housing Choice Vouchers to create new homeowners.  

HUD- Energy Efficient Mortages FHA Mortage Insurance  In 1992 Congress mandated a pilot demonstration of energy-efficient mortgages (EEMs) in five States. In 1995 the pilot was expanded as a national program.  FHA insured 16,000 EEMs in FY1998 (1.5 percent of total FHA loans) 30,044 EEMs in FY1999 (2.3 percent of total FHA loans) and 28,578 in FY2000 (3.1 percent of total FHA-insured loans).  EEMs recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage.  FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy-efficient. see URL for details.

HUD Mortage Insurance Programs Indian Reservations and Other  A family who purchases a home under this program can apply for financing through a HUD approved lending institution such as a bank, savings and loan, or a mortgage company. To quality, the borrower must meet standard FHA credit qualifications. An eligible borrower can receive approximately 97% financing.  An eligible party can produce a gift for the downpayment. Closing cost can be financed; covered by a gift, grant, or secondary financing; or paid by the seller without reduction in value.

HUD- 203(b) Mortage Insurance  To provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD.

HUD- 203(k) loan  The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased. HUD's 203(k) program can help you with this quagmire and allow you to purchase or refinance a property plus include in the loan the cost of making the repairs and improvements. The FHA insured 203(k) loan is provided through approved mortgage lenders nationwide. It is available to persons wanting to occupy the home.

Kane County- Homebuyer Assistance Program (HAP)  The HOMEBUYER Assistance Program helps individuals in Kane and DeKalb counties who have incomes of 80 percent, or below, of the local median income. The program may assist with the down payment and closing costs. In addition, funds may be available for repairing or updating the home in order to meet Housing Quality Standards. Local, participating banks provide first mortgages to eligible applicants. Loans are 30 year, fixed rate, conventional loans at one-quarter percent discount.  

Schaumburg: First Time Homebuyers Program  Through the Home Equity Loan Program (HELP) and Assist Program, first time homebuyers can receive a gift of 4.25% of the home's purchase price to be used toward their down payment and the mortgage origination fees that are commonly associated with closing costs. Homebuyers must meet income and purchase price limits to qualify for the program. (see URL)   

Mortgage Awareness Program  Mortgage Awareness Program (MAP) to help consumers protect themselves from predatory lenders. Credit Counselor listing is provided by a link to the Illinois Department of Financial Institutions website. For questions regarding this list, please contact te Department of Financial Institutions at 217-782-4809 or 312-814-5145 or email them at dficcd@mail.state.il.us   

DuPage Homeownership Center: Reduced interest financing pack  Special reduced-interest financing packages are available for eligible low-income households to help boost their purchasing power. low-income requirements   

DuPage- Just Homes  CHAD provides a solution to home ownership in DuPage County through a community land trust program in which first-time homeowners buy the house and lease the land. When the homeowners sell the house, CHAD buys it back at 60 percent of the appraisal price at the time of the sale. Call for more information.

DuPage County- Homestead and Housing Choice Programs  Both of these programs provide education, counseling and a reduced-interest financing package that significantly boosts the purchasing power of low and moderate income persons to help them buy a home. Additionally, the Housing Choice program allows current Housing Choice ('Section 8') Voucher Holders to use their subsidy toward a mortage payment.