Home Buying Assistance Guide

Home Buying Made Easy with our Downpayment Assistance Program

Financial Guidelines Funds are made available through two programs: the Illinois Affordable Housing Trust Fund program and The Federal Home Loan Program. Funds from these programs can only be used for down payment assistance or closing costs.

The guidelines are the same for both programs.

Down payment funds will range from $3000 to $5000 depending on household income and household size; $5,000 forgivable grant for families at or below 50% the Area Median Income AMI; $3000 for households between 51% and 80% AMI. Disabled individuals are eligible for $5000.00 with AMI not exceeding 80%.

Because there are two programs, participants can receive between $3,000 to $10,000.

The affordability period on the grant will be 5 years; IHDA will record and hold a soft second mortgage against the property for the 5-year period.

The mortgage will be assumable or transferable only to an income eligible person or family. The assistance will only be provided on purchases that meet the following criteria:

  • The mortgage interest rate cannot be more than 2% higher than the conventional rate
  • The purchase price of the property cannot exceed the appraised value of the property.
  • Mortgage must be a fixed rate, fully amortized with a term of at least 20 years
  • Any exotic mortgage products are not acceptable, this includes interest only loans, adjustable rate loans, and 80/20 loans.
  • The loan origination fee charged by the lender cannot exceed 1% of the total purchase price.
  • Property taxes and insurance must be escrowed.
  • Borrower must contribute $1000 towards down payment.

Property Guidelines

  • The property must be single-family without past foreclosure.
  • The property can be in one of six counties, Peoria, Marshall, Tazewell, Knox, Stark, and Woodford

First Time Home Buyer

An applicant interested in down payment assistance must be a first-time homebuyer. A first-time homebuyer is defined as a person who has not owned a property for the past 3 years. Exceptions are made for newly-divorced single persons/parents (within the past 3 years).

One-on-One Credit and Budget Session (Pre purchase Counseling)

All applicants must meet with a housing counselor at METEC to determine program eligibility. They must provide all necessary demographic and income information, tax returns, banks statements, two most recent pay check stubs.

Ratios:

Definition: Housing ratio indicates what portion of an individual’s income is used to make mortgage payments. It includes the household’s principal, interest; taxes and insurance payments divided by the monthly gross income and are expressed as a percentage.

Definition:

Total debt ratio indicates what portion of a person’s monthly income goes toward paying debts and obligations and is expressed as a percentage. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments are divided by the household’s monthly gross income. Condo assessments or HOA fees should also be included.

The maximum allowable ratios are: 31% housing debt-to-income and 38% total debt-to-income.

Application Fee — A nonrefundable $100 processing fee is required for all applicants. The check should be made payable to METEC. The fee covers the cost to process the application and the homebuyers training course. It is part of the borrower’s $1000 contribution.

Home Buyer Training Course – All applicants must attend the Keys to Homeownership home buyer training course. This course covers working with real estate agents and lenders, credit issues, contracts and inspections, home maintenance, and budgeting. It must be completed before a purchase contract is signed for the Home Buying Made Easy Down Payment Assistance Program.

Application Process

  • If all application requirements are met, the applicant will receive a letter indicating that they are income eligible. This does not guarantee assistance, only the ability to proceed beyond the application process.
  • Eligible applicants must provide a copy of the accepted sales contract and loan approval that addresses all of the criteria for METEC’s Down Payment program. The sales contract must allow at least a 30-day period before closing.
  • METEC will provide a letter of commitment to the applicant contingent upon all of the program criteria being met. The commitment will expire on the closing date as set forth in the sales contract. The commitment can be extended at the sole discretion of METEC.
  • If all program requirements are not met upon the expiration of METEC’s letter of commitment, METEC has the right to cancel or extend the agreement.

The Closing

  • A mortgage in favor IHDA shall be signed at closing and will subordinate to the permanent financing.
  • It will take 10 days to process funds and have them at the closing. The housing counselor will work with loan officer to coordinate all documents for closing.
  • Homebuyers are not eligible to receive cash back at closing. If surplus funds exist at closing, the funds will be returned to METEC.