Prepare for your home-buying journey and secure your dream property
with these streamlined, step-by-step first-time home buyer guides.
Homeownership requires a clear understanding of both your budget and the market, but with the right preparation and knowledge, you can buy a home in Illinois. This first-time homebuyer checklist and guide provides facts to help you navigate the home-buying process. You’ll learn about state programs and the necessary steps to secure a property, from setting your budget to the final signature at closing.
Read on to learn more about how to buy a house for the first time in Illinois.
What is a first-time homebuyer? Despite the name, you might qualify as a first-time homebuyer even if you’ve owned a home in the past. While the U.S. Department of Housing and Urban Development defines first-time homebuyers as househunters who have never owned a home before, it also applies if you haven’t owned a principal residence in the past three years prior to the closing date of your new home.
Other groups also fit this category. For example, if you’ve only previously owned a home with a former spouse while married or you’ve only owned a home that didn’t sit on a permanent foundation, then you can qualify as a first-time homebuyer. Certain manufactured homes fit this description, too.
Lenders use these guidelines to determine your eligibility for special state programs. Consider reviewing these rules to see if you can reduce your barrier to entry into the housing market.
You can receive major advantages when buying a home for the first time, as state and local programs are available to help you overcome affordability barriers in Illinois. These options provide low-down-payment choices or lower credit score requirements. You can also find grants and forgivable loans to cover your upfront expenses. Some first-time homebuyer programs even offer tax credits to lower your federal income tax obligations each year.
Other first-time homebuyer benefits include specialized conventional and government loans to support your purchase. You can access loans that require as little as 3% down, while some government-backed loans require zero down payment.
You can also ask your loan officer about down payment assistance grants and loans. These professionals know which programs the lender can accept. They’ll guide you through the application process, as you’ll need to meet the criteria for income stability and credit standing to qualify. Comparing different lender offers can help you find the most affordable path to homeownership. Your loan officer will help you integrate these grants into your final home loan terms.
While this first-time homebuyer guide highlights how these tools make homeownership possible for beginners, eligibility may change based on your household income and your property location. Many cities and counties offer localized assistance pools that match state funds. These benefits give you a strong head start when you save for a house, so take time to research these first-time homebuyer advantages before you sign an offer letter.
Recommended: Illinois First-Time Home-Buying Assistance Programs
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While the path to homeownership may appear daunting, there are clear steps you can follow. Here are 11 steps to prepare you for each stage of the journey. There’s advice on managing your finances and choosing the right professionals, and following these steps could help you avoid common mistakes and find a great home.
Before you look at any properties, take time to go over your finances. Your budget should be big enough to cover the down payment and monthly mortgage payments. You’ll also need funds for property tax, homeowners insurance, and ongoing maintenance costs.
And don’t forget about your credit score. Good credit can help you secure better loan terms from financial institutions. Your debt-to-income ratio needs to match lender limits as well. This ratio compares your monthly debt payments to your gross income. It should be no more than 50% to qualify for a government-backed loan or under 45% for a conventional loan.
Finally, you’ll want to consider the location and plan on staying in the new home for a while. This gives your home equity time to increase through property appreciation and regular mortgage payments. If the average rent payment in your desired location exceeds the cost of a mortgage payment, then homeownership may be the best choice.
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You’ll need a detailed budget to establish a comfortable mortgage payment amount. It should include the down payment, property tax, and any homeowners association dues. You may also want to factor in moving expenses, new furniture, appliances, and landscaping costs. (Check out this home affordability calculator to get started.)
A down payment calculator can also help you estimate these ongoing numbers. Homebuyers often aim for a 20% down payment to avoid private mortgage insurance and qualify for a lower interest rate. The minimum down payment for a conventional loan can be as low as 3% for a first-time homebuyer, while a government loan may require zero down payment, depending on your eligibility.
And if you move out of state, check the local cost of living. You can inspect the average housing costs in that area to ensure the purchase fits your long-term plans.
You can choose from several types of mortgage loans to finance your property purchase:
Shopping for a mortgage lender can help you find affordable loan terms, as each lender offers different interest rates and customer experiences. That said, take time to understand the difference between the interest rate and the annual percentage rate. The annual percentage rate includes the interest rate plus lender fees and discount points, but doesn’t include all closing costs. By comparing these numbers, you can help avoid overpaying.
Consider also asking lenders about their mortgage preapproval process. A faster timeline gives you an advantage when you find a property in a hot market. A mortgage preapproval letter is typically good for 30-90 days, and some lenders may lock your interest rate for that window. This lock protects you from market shifts while you shop for a home in your target city.
Prequalification lets you test the financial waters. This step uses a soft credit pull, which doesn’t affect your credit score. Mortgage preapproval, meanwhile, is when a lender verifies your personal finances using a hard credit pull. It gives you a written commitment for a specific loan amount. This letter shows sellers you have the means to finance the purchase, giving you a clear edge in a competitive market.
During the mortgage preapproval process, you’ll want to provide bank statements and pay stubs from the past two months. You also need federal tax returns from the past two years and employer contact information. Self-employed buyers will need to share business records and profit statements.
Working with a real estate agent upfront saves time and helps make the experience go smoothly, especially for first-time homebuyers. An agent can tailor your search so you spend less time looking at properties that aren’t a good fit for your needs. They have access to new listings that aren’t yet on the market and can preview homes for you to check their structure. A real estate agent also helps you navigate contract negotiations and paperwork and acts as your representative during the transaction.
Take time to read up on how an agent gets paid, as industry norms have changed in recent years. It’s good to understand current fee structures before you sign an agreement.
You can start your search by looking at neighborhoods, school districts, and commute times, as location is one thing you can’t change about a property. Talk to your agent about your top requirements.
And make sure you know your rights during this process. Federal laws protect buyers from housing discrimination, so watch out for steering or a refusal to show homes in certain areas based on your background. Document any strange obstacles or changing stories from sellers or agents, and keep dated notes and screenshots to help protect your rights as a buyer. Knowing the rules ensures a safe experience while you browse the local housing market.
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When you find a home you love, it’s time to make a formal bid. Your agent will help you draft an offer letter, which outlines your proposed price, contingencies, and closing timeline. Contingencies allow you to modify terms or walk away if the home fails an inspection.
If the seller accepts your offer, you’ll proceed to the contract stage, where you’ll submit an earnest money deposit. This deposit shows the seller you’re a serious buyer. Escrow accounts hold these funds until the final sale. If you’re in a buyer’s market, you can negotiate terms to save money. Your agent will guide you through each part of this negotiation stage.
A home inspection is a professional visual evaluation of the home’s structure, major systems, and overall condition. The inspection generally checks areas such as the roof, foundation, electrical and plumbing systems, climate control equipment, and interior and exterior structures for signs of damage, mold, or other defects.
This is an important part of the process that helps you identify potential issues before closing. Findings from the inspection can give you more leverage to negotiate repairs, request credits, adjust the purchase price, or, in some cases, withdraw from the transaction.
While an inspection checks the home’s condition, an appraisal determines its market value. An appraisal involves a person visiting the property and looking around. Lenders require an appraisal to ensure they don’t loan more than the home value.
While your lender provides the appraiser, you’ll need to schedule the appointment or have an agent manage it. You’ll also want to ensure someone is at the house to open the door. The homebuyer pays the cost of an appraisal, which falls in the $300-$400 range on average.
After completing the previous steps, you’ll have reached the final stage: closing. You’ll receive a closing disclosure at least three days before the meeting. Review this document to verify fees and loan terms. You’ll also need proof of homeowners insurance to protect the property. Before closing, take time to perform a final walk-through to check the home’s condition. Take note of any state environmental hazards that need specific coverage.
At the meeting, you’ll sign the official documents, the escrow agent will coordinate the transfer of ownership, and the title company will provide a policy to prove clear ownership. Finally, you’ll pay your closing costs and receive the keys to your new home.
An online calculator can be a big help in comparing home equity loan rates and terms. And it’s not the only calculator you’ll find helpful during your home equity loan process:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFi’s HELOC interest calculator to estimate how much monthly interest you’ll pay.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
As exciting as buying your first home is, settling into a new property requires organization, so here are some first-time homebuyer tips to help you get settled:
Buying a home in Illinois is an achievable goal when you prepare your finances and follow a clear plan. State assistance programs and federal loans provide options to help you overcome upfront cost barriers. Working with an experienced agent ensures you navigate negotiations and inspections with confidence. You can achieve your homeownership dreams by setting a realistic budget and understanding your options.
Closing costs run between 2% and 5% of the loan amount, but you’ll also need funds for a down payment, which varies from 3% to 20% of the purchase price. Your monthly mortgage payment, property taxes, home insurance, and any homeowners association dues should fit into your ongoing budget as well. On top of all that, it may be a good idea to save up even more to cover initial repairs, moving expenses, and new furniture.
Start the process by evaluating your personal finances, checking your credit score early, establishing a realistic budget, and securing a preapproval letter. Next, you may want to find an experienced real estate agent to help you tailor your home search. You can then begin looking at properties that fit your criteria and budget without wasting time on listings that aren’t a good match for you.
Before buying your first house, you’ll want to factor in closing costs, property taxes, home insurance premiums, and ongoing maintenance fees. Also, keep in mind that your credit score can impact the terms you’ll be offered and that a preapproval letter can help you compete for a home in a hot housing market. Lastly, consider working with a real estate agent to help ensure your home-buying process goes smoothly.
You can qualify as a first-time homebuyer in Illinois if you’ve never owned a home before or haven’t owned a principal residence in the past three years. Most assistance programs require you to meet income limits, pass credit qualifications, and complete a free homebuyer education program as well.
Common mistakes include not checking your credit score early on, skipping mortgage preapproval, and getting an estimate from only one lender. Buyers also often underestimate closing costs or fail to factor in maintenance expenses. Furthermore, waiving the home inspection or making a large purchase right before the loan closes may lead to severe problems as well.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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