Illinois is globally recognized for its most populous city, Chicago, or as many call it, the Windy City. Just as it can be hard to keep your footing when the wind whips around the Sears Tower, assessing your home financing options can leave you feeling more than a little off balance.
Fortunately, many residents have found their footing, and decided the Illinois FHA loan program was the right choice for them. Keep reading to see how an FHA loan in Illinois may be right for you.
Why consider an FHA Loan in Illinois
Whether you want to be in the city, or prefer to live elsewhere, choosing to buy a home in Illinois is a great choice. With an average household income of $61,000, which is above the national average, many Illinois residents are using FHA loans to save a little extra money. As of April 2019, the total value of FHA loans in Illinois was $355 million!
Benefits of FHA Loans in IL
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable
FHA Loan Limits in Illinois
The maximum loan limit in Illinois is adjusted every year and the baseline limit for 2021 is currently $331,760. However, the amount is adjusted depending on the location you decide to buy a house. For example, in Dupage the maximum loan limit is slightly higher at $368,000. Check the link below to see a full list of Illinois FHA loan limits for 2021.
Are You Eligible for an FHA Loan in IL?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
What Do You Need to Apply for an FHA Loan in IL?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.