Top 5 Mortgage Home Loans for First-Time Homebuyers

June 24, 2021
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3 min. read time

First-time homebuyers have unique access to mortgage programs that can help you become a homeowner faster and save money along the way. So if you’re getting ready to buy your first home in Oakbrook Terrace, IL, congratulations! Keep reading to find out why these home loans are so popular. And more importantly, how you can apply for a better mortgage.

2021 Mortgage Benefits for First-Time Homebuyers in Oakbrook Terrace, IL

Down payments as low as 0% – 3.5% down
Fewer income restrictions
More flexible credit score requirements
Use of gift funds to help with closing costs
HUD-issued grants and down payment assistance
Government-backed loans with lower interest rates
Access to withdraw IRA funds without a penalty
Tax deductions for points and origination fees

Top 5 Most Popular Home Loans for First-Time Homebuyers

One of the biggest obstacles for many first-time homebuyers in Oakbrook Terrace is the down payment.

The good news is you don’t need to put 20% down to get a competitive rate on your mortgage.

In high-cost areas, the average home could be around $750k, requiring a 20% down payment of $150k. Even if you have the funds available, is it still a smart move to invest the full amount into your home? High-income buyers in Oakbrook Terrace might want to invest that money elsewhere. And for lower-income buyers, a large down payment might not be possible.

The following mortgages are popular options for first-time homebuyers near Oakbrook Terrace, IL. Why? They can help lower your down payment and get you into a house without making you cash-poor or depleting your assets.

1. FHA Loan – 3.5% Down Payment

FHA (Federal Housing Administration) home loans are government-backed mortgages. This mortgage is a popular mortgage option for first-time homebuyers in Oakbrook Terrace because borrowers can qualify with a lower credit score and a low down payment.

3.5% down payment with a credit score of 580
10% down payment with a credit score of 500
Flexible income requirements
Mortgage insurance premium (MIP) is required

2. VA Home Loan – 0% Down Payment

If you’re a member of the military, the VA home loan is one of the best home loan options in Oakbrook Terrace for first-time homebuyers. The VA home loan is available to active-duty service members, veterans, and military spouses.

0% down payment required
Low mortgage rates
Lower credit score requirements
Reduced closing costs
No mortgage insurance requirements

3. USDA Home Loan – 0% Down Payment

Government-backed USDA home loans offer solid advantages for first-time homebuyers in the state of Illinois who want to buy a home in a more rural area. USDA home loans offer low-interest rates and no-money-down mortgages for qualified borrowers.

0% down payment
A government-based mortgage with low interest rates
Benefits to lower-income buyers
Lower mortgage insurance premiums

Check out the USDA eligibility map and find out which areas qualify.

4. Conventional 97 Mortgage – 3.0% Down Payment

The conventional 97 mortgage program is ideal for higher-income buyers in Oakbrook Terrace, IL. Homebuyers with excellent credit can secure a mortgage with a low 3% down payment. It’s more flexible, and you can keep your assets invested elsewhere.

3% down payment
Opportunity to cancel PMI (private mortgage insurance) without refinancing
620 credit score minimum
No limitations on areas or neighborhoods
No income limitations

5. HomeReady by Fannie Mae and HomePossible by Freddie Mac – 3% Down Payment

HomeReady and HomePossible are perfect for first-time homebuyers who want a conventional home loan with a low rate and a low down payment.

3% down payment
Use gift funds for up to 100% of your down payment (HomePossible)
Use gift funds for your closing costs
Down Payment Assistance (DPA) is available for closing costs
You might be able to count rental income on your loan application
You can count income from relatives or other people living with you (HomeReady)

The Fannie Mae HomeReady home loan is also a great loan for borrowers who plan to buy a multi-unit property in Oakbrook Terrace (up to 4 units). One of the units must be your primary residence.

Additional Resources

To find out more information about down payment assistance for 2021, along with housing grants and vouchers, check out this site for local and state-based programs.

Taking Action

Connect with a local mortgage advisor in Oakbrook Terrace, IL, and see if you qualify as a first-time homebuyer. The Claudio Prunotto team can help you start the process and share which home loan programs will give you the best advantages. We’d love to help.