FHA Loans Illinois
Are you striving for homeownership, but not ready to make a 20% down payment? An FHA Loan is your answer!
With FHA Loans, you can get a home loan with as little as 3.5% down.
Take Advantage of FHA Loans to Make Your Dream of Homeownership a Reality
If a traditional mortgage fails to align with your budget and needs, it may be time to consider alternative loan options. Choosing an FHA loan from Homesite Mortgage for your Illinois property purchase is the perfect way to save on your down payment and interest rates while securing your desired home.
How Does an Illinois FHA Loan Work?
Illinois FHA home loans are an attractive mortgage option for borrowers who prefer a lower down payment or have a credit score shy of the required 620 for conventional home loans. FHA loans also offer borrowers lower interest rates, making them an ideal option for more manageable repayments.
This type of loan is made possible through government backing, providing lenders with a financial safety net should the borrower fail to meet their repayment agreement. With the government's guarantee to cover the remaining loan principal, lenders can offer more favorable rates, terms and down payment requirements.
Qualifying FHA Loan Requirements for Borrowers in Illinois
While an Illinois FHA loan is relatively easy to qualify for, borrowers must still meet a few requirements. For starters, we will check your credit score to ensure it's at least 580 to qualify for a 3.5% down payment. However, borrowers with a credit score as low as 500 could still be eligible with a down payment requirement of 10%.
Although there is no minimum salary requirement to apply for an FHA loan, our team will assess your expenses to ensure you can repay the loan. They will calculate your debt-to-income ratio to determine whether it's below 43%, which is ideal. We will also include the required 1.75% upfront and 1.05% annual mortgage insurance payments in these calculations.
Before your loan approval, the FHA will appoint an appraiser to evaluate the property you intend to purchase to ensure it's in satisfactory condition. Once you purchase the property, the FHA requires that you reside in your new home and maintain it as your chief residence for no less than a year.
Illinois FHA Home Loan Limits
FHA home loans come with specific limits calculated annually by the Department of Housing and Urban Development. The more family dwellings on the property, the higher the limit, with a maximum of four units permissible. These are the current loan limits you can expect in Illinois:
- One dwelling unit: $472,030
- Two dwelling units: $604,400
- Three dwelling units: $730,525
- Four dwelling units: $907,900
Reasons to Apply for an FHA Loan in Illinois:
Opting for an FHA loan over a conventional loan will garner the following incredible benefits:
- Reduced down payment options: The biggest drawcard of FHA loans is the low down payment required, ranging from 3.5% to 10% compared to 20% with a conventional mortgage, depending on your credit score.
- Lower credit score requirements: While traditional home loans require a credit score of 620 or more, FHA mortgage applicants need only have a credit score above 500, with some exceptions.
- Great refinancing option: With an FHA loan, you can refinance your mortgage for up to 97.75% of your property's value to get a better interest and repayment rate or obtain the funds.
- Opportunity to pay early: Borrowers are often penalized for paying off their home loans early, but there is no penalty associated with early repayment through an FHA home loan.
Which Will Be Better, an FHA Loan or a Conventional Loan?
Determining which type of loan is best for you comes down to these crucial factors:
- Your available budget: If you have enough saved for a down payment of 20% of the purchase price, a conventional loan may be the way to go. An FHA home loan would be ideal if you only have 10% or less to spare.
- Your credit score: If your credit score is below 620, you may have a better chance of qualifying for an FHA mortgage. Those with a credit score above 620 may benefit more from a conventional mortgage.
- The property price: If you're interested in a home priced above the FHA home loan limits, you should consider a traditional home loan. Properties priced below the FHA loan threshold are eligible for FHA mortgage funding.
Choose Homesite Mortgage for Your FHA Loan in Chicago, Illinois
Discover your FHA loan options when you talk to a Homesite Mortgage expert about your mortgage needs. Our dedicated and knowledgeable team is ready to assist and help you meet your goal of owning the perfect home. Call us now or schedule a call via our short online form, and we'll get back to you soon.