Illinois offers up to $15,000 to help first-time homebuyers cover down payment

CHICAGO - Illinois will offer eligible first-time homebuyers up to $15,000 to help pay for their down payment and closing costs, an effort to combat high housing prices and interest rates.

Gov. JB Pritzker announced the program’s launch on Wednesday with the Illinois Housing Development Authority.

What we know:

The assistance is given as a zero-percent interest second mortgage. Although repayment is deferred for up to 30 years unless the home is sold or refinanced earlier, according to the IHDA.

The announcement also comes just weeks after Pritzker delivered his budget address to the General Assembly, in which he highlighted his efforts to lower costs for Illinoisans as he seeks a third term in office this November.

Housing has undoubtedly been one of the main challenges for lawmakers as limited housing stocks and higher interest rates have made it more difficult to afford a home, especially for younger people with lower incomes.

The average home in Illinois is valued at around $277,483, as of the end of January, which was up about 4.4% from a year before, according to Zillow.

In Chicago specifically, the average home was worth around $305,295, as of January, which was up about 2.4% since the previous year. In some neighborhoods, like Pilsen, the average home costs were above $400,000.

"Homeownership is the cornerstone of the American Dream and a vital engine for building generational wealth—but high entry costs have locked too many working families out of the market," said Pritzker, in a statement.

How to qualify

Dig deeper:

The governor’s office said eligibility is based on the borrower’s credit, household income, and the purchase price of the home.

The borrower must have a credit score of 640 or higher and must contribute at least 1% of the sale price of the home, or $1,000, whichever is higher.

Their debt-to-income ratio must be 50% or lower.

Potential homebuyers are also required to complete homeownership counseling to "ensure they are making the best decision for themselves," according to a news release.

The program is available to individuals up to a certain household income, which varies depending on where the potential buyer lives.

In Cook County, the program is available for first-time homebuyers earning up to $137,885, depending on the size of the household.

Here are the income limits for other Chicago-area counties: