There are a number of first-time home buyer special financing and grant opportunities available in the United States and in particular Chicago, Illinois where the city has special incentives available for new home buyers. Don’t be misled by the term. The tendency to think of a first time homeowner is to think of someone who has never owned a home previously. This is incorrect. According to the Department of Housing and Urban Development new home owners also include anyone who hasn’t owned a home in 3 years or more, a single parent who may have previously owned a home with their spouse, anyone who may have owed a property without a permanent foundation, such as a mobile home or trailer, or a divorced spouse who does not receive alimony or support even though they may have previously owned a home together. These definitions open the door to millions of Americans to take advantage of government home buying programs.
Advantages exist for financing for first time home owners through a number of federal subsidy programs. For example, the typical mortgage loan asks for a 10-20% down payment. For a $200,000 property purchase this amounts to $20,000-$40,000 down payment to obtain a loan. FHA government backed loans offer a guaranteed 3.5% down payment if you have a 580 FICO credit score or higher and 10% if your credit score is as low as 500. Private Mortgage Insurance (PMI) will be required to protect the lender in case of default. Imagine only putting $7,000 down on a $200,000 home.
Besides the lower initial up front payments, FHA approved loans often offer lower interest rates that a person with a high credit score would receive on a conventional loan, saving thousands of dollars over the term of the loan. Another benefit is that FHA loans allow the seller to pay up to 6% of the selling price towards escrow costs. Conventional loans only allow up to 3%. It is no wonder that 1.2 million Americans used FHA guaranteed loans for home purchases last year.
The City of Chicago offers a program for First Time Home Buyer Services Chicago Il for qualified buyers who must attend an 8 hour home buyer education class. The program offers up to 7% of the loan amount to eligible participants. The actual amount is based on the buyers income. Buyers must use eligible lenders to participate in one of two lending programs, either federal government backed FHA, VA or USDA borrowers with annual incomes less than $88,435 and FICO scores of at least 580. or Freddie Mae/Fannie Mac borrowers with credit scores of at least 640 and annual income no greater than $131,775. All eligible borrowers must contribute $1,000 or 1% of the purchase price, whichever is less, to the property purchase.
As you can see the opportunities to buy a new home exist at great savings when you utilize programs offered through government and private programs. Take advantage of services available to you. Ask your Realtor for assistance. They want to put you into your own home.