2024 FHA Loan Limit in Illinois by County

Lender Requirements & Limits for 2024 by County

Saving for a down payment can hold you back from purchasing a home. But with the Illinois FHA program, you can purchase a home with as little as 3.5 percent down, making saving for the down payment a little easier.

You might have money saved in your checking or savings accounts, but family members can also gift cash to increase the money you put down.

The FHA requires proper documentation of where the down payment money is from. This means two months’ statements from checking, savings, money market, or retirement accounts to show you had the money for at least 60 days. Similar statements also need to be provided when money is gifted, and a letter from the gifter needs to be provided as well.

The seller can also contribute up to 6% of closing costs. So if closing costs are going to be an issue, this can be negotiated with the seller.

With a lower credit score, getting approved for a mortgage can be more difficult. The FHA program allows buyers without perfect credit to purchase a dwelling. A mortgage could be approved with a credit score of just 500, though this depends on the lender and will require a 10% down.

While FHA-insured mortgages are easier for a homebuyer to qualify for, there are loan requirements and a maximum loan limit to consider before applying.

2023 Illinois FHA Loan Limits by County

There is a limit on the amount you can spend when acquiring a dwelling using FHA. The loan limits vary depending on the location and the type of dwelling you want to buy. However, loan limits are currently identical across Illinois.

If you are trying to acquire a single-family home, the limit is $498,257, rising to $958,350 for a 4-unit. Dwellings priced higher than this amount cannot be financed through FHA. This loan limit could be more of an issue in the Chicago metropolitan area, where the median sale price is higher. Cook, DeKalb, DuPage, Grundy, Kendall, Lake, McHenry, and Will counties all have a median sales price of $400,000.

2024 FHA limits by counties in Illinois

Who Decides the Illinois FHA Limits?

The U.S. Department of Housing and Urban Development, usually referred to as the HUD, set the loan limits in Illinois. These limits are based on the Federal Housing Finance Agency (FHFA) baseline, and this changes each year in line with their House Price Index (HPI) report. The majority of mortgages conform to the FHFA rules.

It wasn’t always the case that counties in the state had the same loan limit. But due to economic changes, all 1-unit homes are now limited to $472,030.

How to Qualify for an FHA Loan in Illinois

If the home you want is priced at $472,030 or less, it is within the loan limits and can be eligible for FHA. But these aren’t the only requirements to qualify for FHA:

Primary residence

The home has to be your primary residence to qualify. This means your principal residence that you spend the majority of the year living in. The home also has to remain your primary residence and you must live in it for the year after you own it.

Debt-to-income ratio

Your debt-to-income (DTI) ratio will be checked by the lender. This is your monthly debt compared to your income. You will usually need a DTI ratio of no more than 43% for approval. However, in some circumstances, a higher figure is acceptable.

Credit score and down payment

You will need at least 3.5% of the accepted offer price as a down payment. But to qualify for this down payment amount, you will need a credit score of 580 or above. With a lower credit score, you will need to have a 10% down payment.

Mortgage Insurance

To protect the lender,  home buyers have to pay mortgage insurance on a home with an FHA mortgage. Should the borrower foreclose, the lender will be protected against a financial loss.

When your FHA home loan is approved, you will need to pay the first premium at closing. This is the upfront mortgage insurance premium (UFMIP) and will cost 1.75% of the loan amount. Often, this premium can be added to the loan amount, reducing your closing costs.

There is also an annual mortgage insurance premium (MIP) that will cost between 0.40% and 0.75% each year. This premium is spread over 12 months and added to your mortgage payments.

The MIP will still be paid until the loan is repaid or you choose to refinance. This applies to FHA with down payments of less than 10%, but if you put down 10% or more, it can be canceled after 11 years. If you have kept up with your mortgage payments, MIP will usually be removed after 11 years.

Appraisal

The property has to be valued by an appraiser before the loan will be approved. They need to assess that the condition of the home meets the FHA guidelines. The home also has to be worth the price based on comparable home sales.

Buying a Multi-Family in Illinois

You could use an FHA mortgage to buy a property with up to four units as long as you will live in one of them. The rental income from the other units can assist in your approval.

A multi-family can still be obtained with just 3.5% down if your credit score is at least 580. Loan limits are currently $604,400 for a 2-unit, $730,525 for a 3-unit, and $907,900 for 4 units.

Final Thoughts on FHA Loan Requirements

If you don’t have the best credit or money saved for a large down payment, FHA could make it easier to buy a home in Illinois. As long as the home is within the limits and meets appraisal requirements, it will just be up to the borrower to meet DTI, credit score, and other additional financial conditions.