The Illinois HOME START Loan Program for First Time Homebuyers
The Illinois HOME START Loan Program is designed to help first time homebuyers achieve the dream of homeownership affordably. The HOME START program offers homebuyers two loans: the HOME START 30 Year Fixed Rate Loan and an optional HOME START Tax Credit Advance Loan.
HOME START 30 Year Fixed Rate Loan
As the name suggests, the first loan under the HOME START program is a 30 year fixed rate amortizing loan insured by the Federal Housing Administration (FHA) and serviced by U.S. Bank Home Mortgage. As of July 17, 2009, the interest rate is 6 percent and is subject to change in market conditions.
Homebuyers have the option to utilize the HOME START 30 Year Fixed Rate Loan in conjunction with the HOME START Tax Credit Advance Loan, or use the first mortgage on its own.
HOME START Tax Credit Advance Loan
The second loan under the HOME START program is the HOME START Tax Credit Advance Loan which allows Illinois first time homebuyers in need of down payment assistance to access funds on a short-term basis in anticipation of the federal income tax credit for first time homebuyers.
The American Recovery and Reinvestment Act (ARRA) of 2009 provides eligible first time homebuyers with a one-time tax credit of up to $8,000 that will enable them to save on their federal tax bill. Only homebuyers who are purchasing a home before November 30, 2009 are eligible for the tax credit. (See this PDF file for more details about the federal homebuyer tax credit).
The HOME START Tax Credit Advance Loan helps first time homebuyers take advantage of the $8,000 federal tax credit refund in advance to use as a down payment on their first home. However, the maximum loan amount under the HOME START Tax Credit Advance Loan program is 3.5 percent of the purchase price up to a maximum of $6,000.
Within the initial period, the homebuyer will file their tax return requesting the federal tax credit. This tax credit can be used to repay the tax advance loan. If the loan is not repaid by June 30, 2010, then the remaining loan amount becomes a ten year amortizing loan at 0.5% above the rate on the Home Start 30 Year Fixed Rate Loan.
Please also see this PDF file for Program Requirements.
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