Rockford, IL – First Time Home Buyer
In the market to buy your first home? Our Rockford first time home buyer loan programs can help you obtain the financing you need to purchase the home you desire. Our programs offer very competitive terms, including the lowest down payment options for FHA and conventional loans. We also offer unique home buyer mortgages, including no down payment loans for rural properties, and jumbo loans for large or luxury homes. We have programs to meet almost any type of borrowers home financing needs.
Rockford, Illinois First Time Home Buyer Loan Programs
- FHA Loans – Widely popular and considered by many to be the best first time mortgage loan, the FHA is an easy to qualify for loan that offers great terms. This includes a low down payment requirement of 3.5%, and fair credit is allowed (580 or higher). There are other reasons for FHA being selected by most first time buyers, such as eligibility for down payment assistance programs, and other appealing incentives.
- Conventional Loans – A conventional mortgage is any non-government backed loan. These meet the Fannie Mae conforming loan requirements and are usually chosen by borrowers with good or excellent credit and/or a large down payment. There are some situations that a conventional mortgage is better even if you are placing a small down payment or using government assistance.
- USDA Loans – USDA loans are a no down payment loan program available for rural and select suburban area properties. They are available for very low income, low income, and moderate income borrowers. In addition to 100% financing, USDA loans are a great choice for many who will not qualify for other types of mortgage loans. While low income is allowed, you must not have a lot of debt, and a 620 credit score is required. Want to learn more about USDA loans? Visit this page.
- VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment. These loans are not available to the general public, but exclusively to military/veterans.
- Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan. Rockford is part of Winnebago County, which the FHA loan limits for as follows: Single unit: $339,250. Two units: $434,300. Three units: $524,950. Four units: $652,400. For conforming loans, which are used for conventional and VA loans, the maximum loan limits are: Single unit: $417,000. Two units: $533,850. Three units: $645,300. Four units: $703,250. If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.
The above 5 types of loans are the main first time home buyer options that exist. We can help you determine which loan is the right fit for you based on your particular needs and eligibility.
Rockford, Illinois – First Time Home Buyer Down Payment Assistance Programs
First time home buyers in Rockford, IL have an opportunity to receive down payment assistance to help cover the costs of buying your first home.
Rockford Homebuyers Assistance Program – Eligible participants may receive up to $14,999 in assistance. How this works is as long as you stay in the home for 5 years without selling the property or refinancing, you will not have to pay this money back! It is reduced every month by 1/60th and at the end of the 5 years you will no longer owe anything.
- You must occupy the home for at least 5 years as your own primary residence.
- Have less than $50,000 in assets (not including retirement accounts or life insurance policies).
- Attend and complete a homebuyer counseling class.
- Contribute $250 towards the purchase.
- The home must be located within certain parameters, which are shown here on a map.
- Meet certain debt-to-income ratios, which can not exceed 30% front end (your mortgage payment compared to your monthly income), and 41% on the backend (which includes your mortgage payment and all monthly debt payments, such as car payments, credit cards, and other debts that show on your credit report and require a monthly payment).
- The property value can not exceed $112,000.
- Your individual or household income can not exceed those shown below:
Number of persons Total household income
- 1 $32,900
- 2 $37,600
- 3 $42,300
- 4 $46,950
- 5 $50,750
- 6 $54,500
- 7 $58,250
- 8 $62,000
If you would like to rehabilitate a property, you may be eligible to receive up to $25,000 in assistance. To learn more about what down payment assistance options may exist for you, and/or to get pre-approved for home loan, request a free consultation today. You can also learn more about the Rockford DPA program on the official website of the City of Rockford Community and Economic Development.
Frequently Asked Questions About Buying Your First Home
How much do I need for a down payment?
It depends on the type of loan you want. USDA and VA loans often will not require any down payment. FHA loans require a 3.5% down payment, which if you get down payment assistance, only .5% is required. Conventional loans typically require either 3% or 5%.
How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.
Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.
How much can I afford to borrow?
The amount that you can borrow depends on your particular loan type and income. There are maximum loan limits which are set at the county level. Conforming loan limits are the maximum lending amount allowed for conventional mortgages. FHA loans have their own loan limits. You can search the maximum loan amount for your county for each particular loan type by entering your zip code (or any zip code for the county you want to buy a home in). This will display the maximum amount available for all loan types. This is not necessarily how much you can borrow though, but the max amount in your location. Your personal limits will be based upon your income and how much debt you have. For instance, with most loans, you can not have a mortgage payment and debts exceed 43% of your income.
Can I buy a home without a real estate agent?
It depends on your state and the type of loan program. For some states, you must use an agent. In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages. However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.
Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.
Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.
Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband. The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.
Can I buy a home after foreclosure?
Most loan programs will require you to wait 3 years before you can buy again after a foreclosure. There are some instances that you might be able to get an approval in as little as 12 months. This includes the FHA extenuating circumstances program (more commonly known as the “FHA back to work program”). If you lost your job due to a job loss or some other event out of your control, you might be able to purchase a home with a FHA loan after only 1 year.
I do not have much credit, can I still get approved?
A 580 minimum is required for a FHA loan. A 620 is required for all others. You may find a lender who can help you if you have poor credit. We do not offer any bad credit mortgage programs
Have more questions about buying your first home? View our list which covers even more commonly asked questions about buying a home. Or you can give us a call at 1-800-731-3560.