Best Mortgage Lenders for First Time Home Buyers in Illinois

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Are you getting ready to buy your first house in Illinois? If so, you probably have a lot of questions about the buying process. One of the first decisions you’ll need to make is to find the best mortgage lender. We’ll offer a list of the best lenders in Illinois so you can make the best decision.

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Best Mortgage Lenders for First Time Home Buyers in Illinois:

The Housing Market in Illinois: An Overview

Before you look at mortgage lenders, it’s important to know the health of your local real estate market.

Here’s a quick look at the market in Illinois:

Total households: 4,591,779

Median list price: $245,000

3 most expensive cities in Illinois to buy a house:

  • Winnetka: $1,221,361
  • Lake Forest: $967,838
  • Hinsdale: $850,943

3 most affordable cities in Illinois to buy a house:

  • Mount Carmel: $85,132
  • Clinton: $102,592
  • Dixon: $138,221

Knowing the median values of homes in cities across Illinois can help you better prepare for what you might pay for your first home.

Preparing for a Mortgage

There are a few key things you should know about preparing for a mortgage. We’ll take you through each step and offer advice along the way.

First Time Home Buyer Mortgage Process in Illinois

Take a look at your finances to determine how much of a home you can afford. To figure this out, you’ll want to know two key things:

  • How much down payment you can provide. Lenders have their own criteria on how much of a down payment is required. Understanding what you can afford to pay down will help you figure out how much of a home you can afford and allow you to find the right lender.
  • Your current credit score. Lenders also have their own credit score requirements you must meet when applying for a loan. It’s important to know where you stand to better predict your approval chances. The higher your credit score, the lower your mortgage rate will be.

What You’ll Need to Apply

Once you understand your financial situation, you can prepare for the mortgage application. Here’s what you should have on hand when you’re ready to apply:

  • Your Social Security number
  • Last 2 years of tax documentation
  • Last 2 months of pay stubs
  • Your banking account balances (checking, savings, retirement and other investment accounts)

Some lenders may have additional requirements, but these are the main items you should have on hand when you apply. 

Next, we’ll look at required credit scores for popular lenders in Illinois so you can see how your score stacks up.

LenderMinimum Credit Score Required
Rocket Mortgage620
guaranteed Rate620
PNC700
New American Funding620
AllyN/A (no minimum credit score)

Mortgage Options

Be aware of the different mortgage options available to you as a first time home buyer in Illinois. Let’s look at the 5 most common mortgage types to help you understand the benefits of each.

Conventional Loan

This home loan is funded through banks or credit unions. Conventional loans often have higher interest rates since they are not backed by the federal government. Despite higher rates, most conventional loans offer low down payment options and have flexible eligibility requirements.

FHA Loan

This home loan is funded through the Federal Housing Administration (FHA) for first-time home buyers. FHA loans often have lower-than-market interest rates, low credit score requirements (as low as 580) and low down payment requirements (3.5% minimum). FHA loans are offered by many conventional lenders.

USDA Loan

USDA loans are funded through the U.S. Department of Agriculture for homes located in rural areas of Illinois. Most homes outside of major cities qualify for this type of loan. USDA loans often have lower-than-market interest rates, low credit score requirements (as low as 640) and no down payment requirement. USDA loans are offered by many conventional lenders.

VA Loan

This home loan is funded through the U.S. Department of Veterans Affairs for former and current military personnel and their family members. VA loans often have lower-than-market interest rates, no set credit score requirements and no down payment requirements. VA loans are offered by many conventional lenders and VA-only lenders.

Jumbo Loan

This home loan can be either a conventional or FHA loan and is used to finance home purchases that exceed $484,350. This limit might be higher, depending on where your home is located. Jumbo loans often have stricter credit score requirements and higher down payment expectations. Many conventional lenders require a 20% down payment for jumbo loans, but some lenders, like Rocket Mortgage, may only require 10% down.

First Time Home Buyer Programs in Illinois

The Illinois Housing Development Authority (IHDA) has several programs available to provide assistance for first-time home buyers like you. Here are a few of the top programs you should consider.

  • IHDAccess Forgivable: This grant offers up to 4% of your home’s value (limit of $6,000) in assistance for first-time buyers. You do not have to repay this grant if you stay in your home for 10 or more years. To be eligible for assistance, you’ll need to meet state income requirements and should have a minimum credit score of 640.
  • IHDAccess Deferred: This down payment grant offers up to 5% of your home’s value (limit of $7,500) in assistance. You do not have to repay this interest-free loan until you sell your home, pay off your mortgage or refinance. You’ll need to meet state income requirements and should have a minimum credit score of 640 to be eligible for assistance.
  • IHDAccess Repayable: This down payment grant offers up to 10% of your home’s value (limit of $10,000) in assistance. You’ll repay this interest-free loan over a 10-year loan period. You’ll need to meet state income requirements and should have a minimum credit score of 640 to be eligible for assistance.

Current Mortgage Rates in Illinois

Your mortgage rate is the interest rate on your home loan. Securing a lower mortgage rate on your loan can save you tens of thousands throughout the duration of your mortgage.

Your mortgage rate is determined by your lender based on factors including your credit score, down payment amount, mortgage type, home location and mortgage term.

Your mortgage term refers to the duration of your mortgage. There are 2 main types of mortgage terms: fixed and adjustable. Fixed-rate mortgages lock in a set rate and payment amount for the duration of your mortgage. Adjustable-rate mortgages (ARMs) have a set rate and payment for an introductory period, after which this rate and amount will fluctuate based on the market.

Mortgage rates in Illinois can vary greatly from city to city, so it’s important to look at your local market data. To help gauge your expectations, we’ve compiled median mortgage rates for 3 main types of mortgage terms in Illinois.

Loan Type Current Mortgage Rate
30-year fixed 4.046%
15-year fixed 3.461%
5/1 ARM (adjustable rate) 4.156%
Rates based on an average home price of $202,675 and a down payment of 20%.
See more mortgage rates on Zillow

Closing a Mortgage

The last step in the mortgage process is closing on your new home. During this process, you’ll walk through your new house one final time to ensure it’s in the agreed-upon condition. You’ll also sign all remaining financial paperwork and review the terms of your mortgage. Your down payment and any agreed-upon closing costs will also be due at this time.

Finally, you’ll receive the keys to your new home and the closing process is complete! While the timeframe of this process varies from lender to lender, typically, you can expect the closing process to take between 30 – 45 days. Online lenders like Rocket Mortgage can speed up this timeline thanks to fast approvals and verifications.

Here are typical closing day timelines from top lenders in Illinois.

LenderAverage Days to Close Loan
Rocket Mortgage30 days
Bank of America45 days
PNC30 days
US Bank44 days
SunTrust60 days

Best Mortgage Lenders in Illinois for First Time Home Buyers

Now that you’re an expert on the mortgage process for first time home buyers in Illinois, it’s time to look for your mortgage lender. We’ve compiled the top lenders in the state and grouped them into convenient categories.

1. Best Overall: Rocket Mortgage

Owned by Quicken Loans, Rocket Mortgage makes applying online quick and easy for first-time home buyers. Rocket Mortgage’s speedy verification process can show you the loan options you qualify for in a matter of minutes. It also offers 24/7 customer service to help you through the process.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

2. Best for Poor Credit: PNC Bank

Is your credit score on the low end? PNC Bank may be able to help.

PNC Bank considers alternative credit (on-time rent and utility payments) so it’s easier for many first-time home buyers to get approved. You can also start the application process online or apply in person.

Loan types offered: Conventional, FHA, USDA and VA

3. Best for Face-to-Face Service: US Bank

US Bank is one of the top traditional lenders in Illinois if you’d like a full in-person experience where a loan professional can guide you through the application process. US Bank offers a large selection of mortgages to choose from and sometimes takes alternative credit into consideration.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620 (alternative credit considered)

4. Best in Mobile Applications: guaranteed Rate

Is applying on the go important to your busy schedule? Look into Guaranteed Rate. This lender has become one of the top lenders in Illinois and offers an intuitive mobile application process. Guaranteed Rate also offers some down payment assistance options.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

5. Best for VA Loans: Veterans United

If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.

In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.

Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.

6. Best for Self-Employed Home Buyers: Luxury Mortgage

Luxury Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.

It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.

Get Ready to Buy Your First Home in Illinois

Remember, buying your first home is a huge decision. Take as much time as you need to explore all of your mortgage options until you find the lender who best matches your financial goals.

Frequently Asked Questions

1) Q: How do I get pre-approved?

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1) Q: How do I get pre-approved?
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First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!

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2) Q: How much interest will I pay?

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2) Q: How much interest will I pay?
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Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.

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3) Q: How much should I save for a down payment?

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3) Q: How much should I save for a down payment?
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Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first-time buyers. Check out the lenders that specialize in making the home buying experience a breeze.

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