Illinois Veterans that served our country or are currently active in the military may qualify for the Welcome Home Heroes Grant. This grant provides down payment assistance for our heroes in the amount of $10,000. It also provides a standard 30-year fixed loan and the option to receive a mortgage credit certificate in order to decrease the veteran’s tax liability. This program, which is funded by Governor Quinn’s Illinois Jobs’ Now program that provided thousands of jobs in the construction industry has certain qualification requirements, just like any other program.
Qualifying for the Welcome Home Heroes Grant Program
The qualification requirements for the Welcome Home Heroes Grant are simple:
- If you are a veteran, you do not need to be a first-time homebuyer
- If you are currently active in the military or reserves, you must be a first-time homebuyer.
- Your income and subsequent debt ratio must meet the program requirements, no exceptions
- The property must be a 1-2 unit property
- It must be a primary residence, no investment or vacation homes
- Maximum LTV 96.5 to 100% depending on the mortgage product used
- All government financing is available, including FHA, USDA, and VA loans
- Minimum credit score of 620 if using government financing
- Minimum credit score of 660 if using conventional financing
Veterans or active military personnel using the program will be required to put 1% of the purchase price or $1,000 of their own money down on the home, whichever amount is greater. In addition, borrowers must agree to the 30-year term with a low interest rate in order to ensure that the financing is affordable for them as they settle back into civilian life. As an added requirement, every person using this program must undergo housing counseling, just to ensure that they understand what they are getting themselves into and that they are not jumping into homeownership just because they are back and need a place to live.
Using the Tax Credit
One of the most unique components of the Welcome Home Heroes Grant is the mortgage credit that borrowers can use on their income taxes. Borrowers are able to deduct 20 percent of the mortgage interest they paid throughout each year as a deduction on their income taxes. This is yet another way to thank the veterans and active military for protecting our country and helping them make homeownership more affordable. Over the entire life of the loan, many borrowers can save up to $20,000 on their income taxes. This credit is a direct deduction of their income, which means a dollar-for-dollar credit. The rest of the interest (the remaining 80%) can still serve as a standard itemized tax deduction as any other taxpayer would be able to do.
The Type of Loans
Most borrowers will use VA funding because of its easy to qualify for guidelines, including the need for no down payment, however, some borrowers opt for USDA, FHA, and even conventional financing depending on their financial status and the amount of money they have to put down on the home. VA financing does require an upfront funding fee, which some borrowers do not want to pay. If they have the credit (over 660) and the down payment to use on a conventional loan, they can bypass that fee, but will have to pay PMI if they put less than 20 percent down on the home.
The key is to figure out which loan works to your benefit the most, not only today but in the future. Figure out the total cost of the loan including the interest and insurance payments that are required based on the loan program chosen and then determine how long you think you will stay in the home. This can help you figure out if choosing the VA, USDA, FHA, or conventional financing to use alongside the Welcome Home Heroes Grant is right for you.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.
