2025 Illinois First-Time Homebuyer Programs and Loans

If you’re a first-time homebuyer in Illinois, you may be able to take advantage of programs and assistance options specifically for buyers like you.

You can choose from several programs that can help you pave a smoother path toward homeownership. These programs can help with closing costs or down payments or provide specialized mortgage assistance.

First-time homebuyer programs in Illinois

Illinois offers several statewide and county-wide first-time homebuyer programs. The goal is to ease the financial burden of purchasing a home for first-time homebuyers by assisting with down payments, closing costs and affordable mortgage options for eligible individuals and families.

• IHDAccess Forgivable Mortgage: Good option for down payment forgiveness
• IHDAccess Deferred Mortgage: Good option for deferred down payment repayment
• IHDAccess Repayable Mortgage: Good option for higher down payment assistance
• Chicago Housing Authority Down Payment Assistance Program: Good option for Chicago city residents
• City of Alton Homeownership Program: Good option for Alton city residents

IHDAccess Forgivable Mortgage

The IHDAccess Forgivable Mortgage program — offered through the Illinois Housing Development Authority (IHDA) — provides a 30-year, fixed-rate mortgage and a silent second mortgage equal to 4% of the purchase price (up to $6,000) to cover the down payment and closing costs. Applicable to all mortgage types, this down payment assistance program is forgiven monthly over 10 years. However, if you sell or refinance before the 10-year forgiveness period ends, any unpaid balance will become due.

Requirements

• First-time or repeat homebuyer
• Credit score of 640 or higher
• Debt-to-income (DTI) ratio of 50% or lower
• Annual income limit ranging from $123,840 to $134,520, based on household size and county
• Purchase price limit ranging from $610,939 to $724,481, based on county and property type
• Contribute 1% of the purchase price or $1,000 (whichever is higher)
• Use home as primary residence for at least 10 years
• Complete an online or in-person homeownership education course prior to closing

Pros and cons

IHDAccess Deferred Mortgage

IHDAccess Deferred Mortgage is a first-time homebuyer program that offers a 30-year, fixed-rate mortgage and a loan equal to 5% of the purchase price (up to $7,500) to cover closing costs or contribute to a down payment. The additional loan is interest-free, and payments are deferred for the duration of your mortgage — repayment is not required until you pay off the home loan, sell your home or refinance your primary mortgage.

Requirements

• First-time or repeat homebuyer
• Credit score of 640 or higher
• DTI of 50% or lower
• Annual income limit ranging from $123,840 to $134,520, based on household size and county
• Purchase price limit ranging from $610,939 to $724,481, based on county and property type
• Contribute 1% of the purchase price or $1,000 (whichever is higher)
• Use home as primary residence
• Complete an online or in-person homeownership education course prior to closing

Pros and cons

IHDAccess Repayable Mortgage

The IHDAccess Repayable Mortgage program offers assistance of up to 10% of purchase price (up to $10,000) alongside your 30-year, fixed-rate mortgage. It’s an interest-free loan for down payment and closing costs and is repayable monthly over 10 years.

Requirements

• First-time or repeat homebuyer
• Credit score of 640 or higher
• DTI of 50% or lower
• Annual income limit ranging from $123,840 to $134,520 based on household size and county
• Purchase price limit ranging from $610,939 to $724,481, based on county and property type
• Contribute 1% of the purchase price or $1,000 (whichever is higher)
• Reside in home as primary residence
• Complete an online or in-person homeownership education course before closing

Pros and cons

Chicago Housing Authority Down Payment Assistance Program

The Chicago Housing Authority Down Payment Assistance program offers Chicago residents up to $20,000 in grants that can be used toward the down payment, closing costs or reducing the mortgage amount. Homebuyers moving to Chicago may be eligible for a $10,000 grant. The grant is forgiven after you’ve lived in the home for 10 years.

Requirements

• Cannot have owned a home in the past three years
• Home must be your permanent residence in Chicago
• Complete an approved homebuyer education class
• Receive preapproval from an approved lender
• Provide proof of a signed purchase agreement
• Be at or below income limits
• Contribute a minimum of $3,000 toward the home purchase or $2,000 if on Social Security (not needed for VA loans)

Pros and cons

City of Alton Homeownership Program

The City of Alton’s Homeownership program offers up to $3,000 in down payment and closing cost assistance to purchase a home in the city. To qualify, you need to be below 80% of the area’s median income threshold. After living in the home for five years, the loan may be forgiven.

Requirements

• Home must be within the city of Alton
• Contribute $1,000 toward the home purchase
• Earn an annual income of 80% below the median income threshold in the area
• Secure a home loan within 1% of current market rates
• No negative marks on credit history within the last 12 months
• Be at or below home purchase limits

Pros and cons

Illinois first-time homebuyer qualifications

To qualify for first-time homebuyer programs, work with an approved lender to ensure your annual income and purchase price will meet a program’s limits. Depending on the program, you’ll need to maintain credit score requirements and be below a certain DTI ratio. You must also complete a homebuyer education course and have your minimum contribution amount ready.

Steps to apply for a first-time homebuyer program

When it’s time to move forward with purchasing your first home in Illinois, follow these steps to apply for a first-time homebuyer’s program.

1. Find an approved lender. Use the IHDA or your local housing authority’s website to locate approved lenders near you. Your chosen lender’s loan officer will assess your eligibility, gather the necessary documentation and review your credit score, income and other factors to determine borrowing capacity. While Illinois programs have specific credit score requirements, the average state credit score as of 2024 is 720.
2. Complete a HUD-approved homebuyer education course. Most programs will require you to complete an online or in-person homebuyer education course.
3. Review your loan estimate. Choose your mortgage lender and provide the required information and documentation to the loan officer. If you’re preapproved for a loan, you’ll receive a loan estimate outlining the loan you qualify for, the loan amount and any applicable interest and fees.
4. Find your home. Get connected with a real estate agent to assist in shopping for a home within your budget. When you find a home you like, your agent can negotiate with sellers and submit an offer when you’re ready.
5. Schedule your appraisal and inspection. After your offer is accepted, arrange for the home appraisal and inspection.
6. Undergo the underwriting process. A final review of your application, documentation and home details will be completed to ensure you qualify for the loan amount and interest rate.
7. Close on your mortgage. Review and sign the required loan documentation to finalize the home purchase process, make any payments and receive the keys to your new home.

Understanding Illinois first-time homebuyer down payment assistance

Illinois down payment assistance (DPA) programs can make homeownership more attainable by reducing your upfront financial burden. You may qualify for grants, loans or tax credits, which can help to ease the cost of purchasing a home.

According to the Down Payment Resource’s homeownership program index, 45 programs are available in Illinois, and almost 69% of them had funding available as of January 2025.

Deferred second mortgage

Requires repayment? Yes

A deferred second mortgage provides down payment assistance in the form of a loan. Considered a second mortgage, this loan typically doesn’t require repayment until the homeowner pays off the first mortgage, or sells or refinances the property.

Forgivable second mortgage

Requires repayment? Yes, if conditions aren’t met

A forgivable second mortgage offers down payment assistance in the form of a loan. Homebuyers don’t make loan payments or pay interest as long as they remain in the home for the agreed-upon duration, which is typically between five and 10 years.

Grant

Requires repayment? No

Grants provide homebuyers with cash to cover a portion of the mortgage and down payment. Unlike second mortgages, grants do not require repayment.

Mortgage credit certificate

Requires repayment? No

A mortgage credit certificate (MCC) allows first-time homebuyers to claim up to $2,000 as a federal income tax credit each year. The total credit is based on a percentage of the mortgage interest payment, providing direct financial assistance.

Keep these things in mind about DPA programs

When researching down payment assistance programs, take the time to review the program requirements and expectations before proceeding. In most cases, you will need to be at or below income limits and meet maximum home purchase price requirements. Plus, certain programs may require you to pay back the funds you receive if you move, pay off or refinance the first mortgage or sell the property before a specified period lapses.

How much of a down payment do I need to buy a house in Illinois?

The down payment required for a house in Illinois varies, based on factors like your home’s purchase price. To give you an idea of what you may pay, check LendingTree’s latest first-time homebuyer study, which found the average down payment in Illinois is $32,645. Depending on the type of home loan you borrow, you may need to put down 3% and up, even as high as 20% if you want to avoid paying for private mortgage insurance for conventional loans.

Ideally, you should also consider your mortgage rate, along with home prices and down payment requirements when deciding on a home that aligns with your budget.

Can I qualify for down payment assistance in Illinois?

You can qualify for down payment assistance in Illinois if you’re able to meet the minimum requirements. For example, assistance through IHDA means you’ll need to first secure a mortgage, have a credit score of 640 or higher, maintain a debt-to-income ratio of 50% or less, meet income and purchase price limits, and complete a homebuyer education course.

How do I apply for Illinois first-time homebuyer down payment assistance?

You can start by contacting lenders to see which programs are available to you within the county or city you live in Illinois. For IDHA programs, you can visit the website to see a list of approved lenders.

 Here’s what you need to know about the process of applying for a home loan.

Other first-time homebuyer loan programs

Conventional loans

Conventional home loans are mortgages that aren’t guaranteed by the government, like FHA or VA loans. Many of these loans require only a 3% down payment for first-time homebuyers. You can also shop around for competitive interest rates and flexible terms for eligible borrowers.

FHA loans

FHA loans are government-backed mortgages from the Federal Housing Administration, designed to make homeownership more accessible to eligible homebuyers. These loans offer more lenient credit qualification requirements, making them a popular choice for first-time homebuyers and borrowers with less-than-perfect credit. FHA loan rates tend to be slightly more competitive compared to conventional loans.

VA loans

VA loans are home loans backed by the U.S. Department of Veterans Affairs (VA) and offered exclusively to military service members, veterans and eligible spouses. Borrowers who qualify can take advantage of these loans for their favorable terms, like affordable interest rates and no down payment requirement.

USDA loans

Administered by the U.S. Department of Agriculture, USDA loans are designed for individuals in rural communities with limited incomes. This type of loan also offers no down payment requirement and competitive interest rates.

What are the best first-time homebuyer loans?

Evaluating your credit, income and other eligibility criteria can help you determine the best loan type. You can also seek guidance from lenders to choose an option that aligns with your financial situation and qualifications.

Home price trends in Illinois’ major areas

Home prices rose by 4.5% between October 2023 and October 2024 across the U.S., according to the latest figures from the Federal Housing Finance Agency (FHFA) House Price Index.

Home prices in Illinois saw higher-than-average increases, specifically in the Lake County-Kenosha County metro area, which saw the largest increase of 8.2% year over year and 0.9% from the previous quarter.

Additionally, in the Chicago-Naperville-Evanston metro area, home prices increased by 7.9% year over year, with a 2.5% rise from the previous quarter. This was followed by the Elgin metro area, where home prices rose by 6.2% year over year and 3.3% from the previous quarter.

Is there a first-time homebuyer tax credit in Illinois?

There is currently no federal first-time homebuyer tax credit. The Illinois mortgage credit certificate is also out of commission. However, homeowners who itemize their federal taxes may be able to deduct homeownership-related expenses.

What are the current mortgage rate trends in Illinois?

Illinois mortgage rate trends have been relatively consistent with national mortgage rates in 2025 — still higher compared to pre-pandemic levels. The expert mortgage rate predictions from LendingTree say interest rates will likely remain at about 6% into 2025 because of the uncertainty around the economy and inflation.