USDA Loans in Illinois

Illinois is much more than Chicago. From the fertile farmlands of central Illinois to the communities surrounding Chicago, Illinois has plenty of designated rural and suburban areas that qualify for a USDA home loan. 

USDA home loans offer a financing guarantee opportunity for Illinois residents looking for a home purchase in a quiet, rural, or suburban setting. The Department of Agriculture backs these rural development loan programs to help revive rural communities and neighborhoods. The most important benefit of USDA loans is that they don’t require any down payment and often have competitive interest rates that make homeownership more accessible.

Society Mortgage specializes in these government-backed mortgages. Our experienced company is here Prairie State applicants get access to USDA guidelines, handle the qualification process, and buy their forever home in Illinois.

The USDA Rural Loan Program

The USDA loan program is backed by the Department of Agriculture and provides people in Illinois with an opportunity to buy property in rural areas of our state. Large swathes of Illinois qualify — even areas relatively close to cities and towns, as long as they are not urban. To make this loan option more enticing, there is no need for a down payment, interest rates are competitive, and the closing costs can be rolled into the loan itself. All in all, our goal as housing lenders is to help revive existing rural communities and make them more appealing for people to move there.

USDA Financing for Your Illinois Home

Zero down payment

USDA loans stand out from other mortgage options because of their 0% down payment requirement. The signature benefit of 100% financing makes it easier for first-time buyers to buy their first home in the Illinois countryside. Bearing in mind how expensive home prices can be, even a small down payment of 5% can be a significant burden on people’s finances and will drain their savings. 

Interest rates

USDA loans come with a competitive interest rate often lower than conventional or FHA loans. This makes homeownership more accessible to moderate-income people and lightens the monthly mortgage payments.

Mortgage Insurance

Mortgage insurance for USDA loans is often lower than alternatives in an effort to help people buy a home in Illinois.

Closing costs

Closing costs can quickly add up to 6% of the home’s value. To ease the burden on borrowers’ finances, the USDA allows the closing costs to be rolled into the loan itself. There is also the possibility for the seller to cover part of the closing costs.

Essential USDA Loan Requirements in Illinois

Pros and cons of a USDA loan compared to a VA loan or Conventional loan

USDA loans are backed by the Department of Agriculture, therefore they require a 0% down payment and have competitive interest rates. Additionally, they roll closing costs into the loan and have lower mortgage insurance costs. However, compared to VA and conventional loans, USDA loans have strict location and income eligibility requirements. 

Area eligibility

The most important requirement for a USDA loan is property eligibility. While Chicago proper and immediate surrounding areas are excluded, many communities throughout the state qualify for these loans. Eligible areas include much of central Illinois, the river communities along the Mississippi, and many suburban regions beyond the Chicago metropolitan area.

This eligibility map lets you check whether the investment property you are looking for is located in an eligible area. You can also map out areas of interest that are eligible for a USDA loan and match your home living expectations.

Loan Income qualifications

The USDA loan program is geared toward moderate-income people. The aim is to boost the chances of people who may not qualify for a traditional loan program.

Illinois residents must show that their household income is no higher than 115% of their area’s median income, which currently stands at $112,450. These USDA income limits vary considerably across Illinois regions — requirements differ between affluent Chicago collar counties and rural areas in southern Illinois. Your Society Mortgage advisor will check your annual income eligibility based on the geographic location you are looking for.

Loan credit requirements

USDA credit requirements verify that you are trustworthy and creditworthy. They require credit scores of 640 and above, as this threshold often leads to streamlined approval. However, the program is quite flexible and will assess your overall financial picture, including consistent employment history, stable income, and responsible debt management. If you can show these, you may be able to get a USDA loan with a minimum credit score.

Debt-to-income (DTI) ratio

The same stands true for your debt-to-income ratio (DTI). The DTI assesses how much of your income goes to paying debts (including your future mortgage) and how much is left to pay for everyday necessities. The goal is to be able to pay your mortgage comfortably. If you have savings or can make a down payment, you may still obtain a USDA loan even if your DTI is higher than 41%.

Minimum property requirements for a USDA mortgage

Regardless of the USDA loan amount, your Illinois home must be your primary residence and can’t be rented or used as an investment for a specific length of time.

It must also meet USDA property types standards, which means it must be sound and safe. Given Illinois’ challenging weather conditions, with hot summers and cold winters, properties must display sound construction, reliable heating and cooling systems, and proper maintenance.

The home’s value must also match local market conditions and property prices.

The UDSA Loan Application Process

When you apply with Society Mortgage, the mortgage application process is streamlined and easy to follow.

USDA income limit and overall financial check

Our lending team conducts a thorough financial review and gathers the necessary documentation to support your USDA loan eligibility requirements. We check monthly income, credit history, recent pay stubs, tax returns from the past two years, current bank statements, and credit reports to get a clear picture of your finances. 

The USDA program requires two years of consistent employment history, though allowances exist for recent graduates and those who have changed jobs within their field. Self-employed borrowers need to provide additional documentation, including profit-and-loss statements and business tax returns.

The USDA examines both your proposed housing payment and your total monthly obligations relative to your income. This way, even a first-time home buyer can afford to pay for their mortgage without overstretching their finances.

Society Mortgage: Your Illinois USDA Expert

Our extensive experience with Illinois real estate and USDA lending requirements makes us a leading housing lender for USDA loans.

Society Mortgage knows all USDA information, the requirements, the application form, and how to expedite all stages until first-time home buyers have the keys to their new home in their hands.

Illinois is brimming with opportunities to live in a rural setting while still not far from major towns and cities. Contact our Illinois USDA loan specialists today to check your eligibility and fill in your application form for a home in the Prairie State!