Low-income single mothers in Illinois struggle to obtain financial assistance or loan opportunities to purchase their first home. The median price of real estate markets in Illinois increased to $285,700 in 2022 from $273,600 in 2021, an increase of a whopping 5%. In some Illinois communities, the numbers are even higher. Fortunately, many federal and state assistance programs are designed in Illinois that can improve a single mother’s chance of success.
Do Single Mothers With Bad Credit Qualify For Illinois Home Loans?
First time homebuyers or single mothers with bad credit can often qualify for homeownership assistance or home loan programs. There are many nonprofit or government homeowner assistance programs designed in Illinois for people with low income or poor credit scores. Loan pricing and interest rates on these loans are pretty competitive compared to loans available to borrowers having high credit scores. Any lending program has a specific credit qualification; therefore, it is essential to take all the necessary steps to improve their credit standing before single mothers go house hunting.
List Of Single Mom Home Loan In Illinois
Home loans for single moms in Illinois are not challenging to locate when you know where to look for these resources. Some of the single-mom home loan programs in Illinois are as follows:
1. Illinois FHA Loans
One of the most popular loan programs among single mothers in Illinois is FHA loans, which have many benefits. These loans are available throughout Illinois and come with low eligibility requirements, fixed low-interest rates, and are much more affordable and accessible, unlike conventional loans. As a single mother with a credit score of 580 or higher, you need to pay a down payment of only 3.5% of the overall value of the property on your FHA loan, so it is a better option than conventional mortgages with high down payment requirements. Many lenders in Illinois also accept single mothers and borrowers with credit as low as 500 as long as you can offer alternate forms of credit, such as proof that you can provide your utility bills regularly or if you’re willing to pay a bit higher down payment. The average terms for single moms in Illinois of an FHA home loan include the following
- A minimum credit score of 580 or even 500 in some instances, debt to income ratio of 50% or lesser
- Fixed and low-interest rates
- Paying private mortgage insurance monthly throughout the payment.
- Initial down payment ranges between 3.5% to 10% of the total value of your home, depending on your credit scores.
2. Illinois VA loans
While the Federal Housing Administration manages FHA loans, VA loans are managed by the Department of Veterans Affairs. These loans are available only to former members or eligible surviving spouses. Single mothers who think they can meet the eligibility requirements of these loans should apply for them. The average terms of loans for Illinois single moms include the following
- A minimum credit score of 500
- No initial down payment in the majority of the cases
- Debt to income ratio of 50% or even lesser
- No private mortgage insurance payments
- Fixed low-interest rates.
3. Illinois USDA Loans
Illinois USDA loans, popularly known as Rural Development Loans, are designed by the federal government to encourage home buyers to move into the state’s rural regions. If you’re considering properties in and around the rural areas of Illinois, then this loan will be the cheapest option for you, even though it has stricter eligibility criteria compared to VA or FHA loans. The average terms on these loans for single moms include the following
- Little to no initial down payment
- A minimum credit score of 620
- Debt to income ratio of 40% or lesser
- Conventional private mortgage insurance payment
- Fixed and low-interest rates
4. Freddie Mac Home Possible Mortgages
Low or extremely low-income borrowers who cannot get conventional mortgages can apply for Freddie Mac Home Possible Mortgages, which require payment of 3% of the total home purchase price as a down payment. Home Possible Mortgages enable multiple sources for down payments like family gifts, co-borrowers, secondary financing, co-employee assistance, etc. The minimum credit score should be 660. As soon as you pay around 20% off your loan, the mortgage insurance will get canceled, and in this way, you can reduce your mortgage payments further.
5. Illinois State Treasurer’s Office Finally Home
The Illinois State Treasurer’s Office administers the Finally Home Program in Illinois, designed for low-income home buyers, including single moms struggling to qualify for conventional mortgages due to damaged credit, high debt-to-income ratio, or limited finances. This program provides a 5-year 10% mortgage guarantee to approved lenders and is available statewide throughout Illinois. A five-year 10% loan guarantee is provided in this program. To be eligible for this program, single mothers must contribute a minimum of 3.5% of their home purchase price towards the down payment, and their household income should not exceed 150% of the United States Department of Housing and Urban Development’s median size.
6. IHDA Access Repayable
This loan offers a 30-year fixed rate mortgage and an interest-free second mortgage that borrowers can use for closing costs and down payment. IHDA Access Repayable loan can be repaid in monthly installments over ten years. Borrowers have different loan options, including VA, FHA, USDA, and Fannie Mae loans. This loan is available to repeat and first-time homebuyers, provided they can contribute 1% of the purchase price or $1000, whichever is higher. To apply for this loan, you need a minimum credit score of 640. IHDA Access Repayable assists up to $10,000 or 10% of the home’s purchase price for closing costs and down payment.
Single mothers in Illinois deserve to live securely and safely in a permanent home that they can call it to be their own. This is the reason why there are a lot of financial assistance programs and home loans available for single mothers in Illinois. While the conventional loan may be out of your reach due to poor credit and low-income requirements, you can easily find an option with a lender offering VA, USDA, or FHA loans.