Limited Funds for a Down Payment? These Loan Programs Can Help You Out

Posted by Laine Smith on 5/4/16 9:55 AM

Topics: Saving Money First Time Home Buyer Closing on your Home Loan Types Down Payment Assistance Down Payments

Mortgage rates are hovering near yearlong lows and rental rates continue to skyrocket, so why isn’t everyone buying a home right now? The truth is, one of the biggest challenges renters face is saving for a down payment, especially renters that are burdened with astronomical leases and student debt payments.

Here are four loan programs that offer down payment assistance to qualified and eligible Iowa and Illinois homebuyers.

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1stHomeIllinois

The Illinois Housing Development Authority (IHDA) rolled out the 1stHomeIllinois program in late summer of 2015 with the projection of helping 4,000 first-time homebuyers achieve homeownership.

Program benefits include:

  • $7,500 down payment and/or closing cost assistance (which is forgivable after five years and requires no repayment).
  • Availability in a 30-year fixed-rate mortgage (FHA, conventional, USDA and VA).

To be eligible for this program, you must be a first-time homebuyer or someone who has not owned a home in the last three years (veterans are exempt). 1stHomeIllinois is limited to certain Illinois counties and funds are limited. To see the list and other eligibility requirements, click here.

@HomeIllinois

In an effort to make homeownership affordable and obtainable to creditworthy borrowers, IHDA unveiled the @HomeIllinois program in early 2015. The program allows first-time and repeat homebuyers to gain home financing with as little as $1,000 out of pocket.

The program boasts a la carte benefits that can be tailored to a buyer’s individual financing needs, which include:

  • $5,000 down payment or closing cost assistance
  • Lender paid mortgage insurance
  • Choice of FHA, VA, USDA or conventional loan type
  • Federal tax credit certificate (first-time homebuyers only) 

This IHDA product is available statewide. To learn more about @HomeIllinois eligibility requirements, click here.

Homes for Iowans Plus

Homes for Iowans Plus is an Iowa Finance Authority (IFA) program that provides 25- or 30-year fixed rate mortgages and up to $2,500 in grant funds to go toward down payment and/or closing costs.

The program is available to both first and repeat homebuyers who meet the program’s income and purchase price limits. Another added benefit is that the borrower’s interest rate does not change based on their qualified credit score. For more information about eligibility requirements, click here.

FirstHome Plus

FirstHome Plus is limited to first-time homebuyers, anyone who has not owned a home in the last three years, military veterans and homebuyers purchasing in a targeted Iowa area. 

The FirstHome Plus program offers a fixed rate mortgage (conventional or government-backed) with an interest rate typically lower than market rates. FirstHome Plus also provides up to $2,500 in grants to be used toward down payment and/or closing costs. To learn more about the FirstHome Plus eligibility requirements, click here.

Contrary to common belief, it is not necessary to put down 20 percent when purchasing a home. There are several loan options that allow little to no down payment. See our list of ways to buy a home without 20 percent down.

Compass Mortgage is both an Illinois Housing Development and Iowa Finance Authority lender. For more information about loan eligibility, contact one of our mortgage bankers.

Looking to purchase your first home? Download our free Mortgage 101 Handbook for everything you need to know about credit scores, loan options, the mortgage process and more.

Download: Mortgage 101 Handbook

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