City of Chicago Grants Funds to Keep Home Buyers Here

It is amazing to find only a few people know about the City of Chicago Mortgage Revenue Bond Program, a housing assistance program designed to help the first-time buyer purchase a primary residence, and allow other home buyers to purchase homes in Target Areas within the city limits.   Essentially, this is a grant of forgivable funds offered by the city through investors, and loans are originated through participating bankers approved by the city, such as Chicago Bancorp.

The U. S. Census Bureau divides the city into tracts, and these are further subdivided for program qualification and can be found throughout
Chicago.   Several of these qualifying Target Area housing tracts are located in greater Edgewater and Uptown.   The city would love nothing more than to maintain a growing population within the city limits, thus the entire town is in what™s known as a Non-Target Area, designed to attract qualified first-time buyers.

The program assists home buyers with up to a 4% grant for closing costs not to exceed $15,000.   This includes all loan costs such as fees and points, prepaid items such as tax stamps, and title and legal fees.   It allows for 100% financing for those who qualify, and offers all borrowers a traditional 30 year fixed rate mortgage at favorable rates.   To put the focus on those families who would benefit the most by funding, a Federal Recapture Tax is in place to deter those with a œfree money mentality.   Said an other way, the program seeks to avoid: 1. selling a home within 9 years; 2. a borrower earning a much higher income since the closing date: 3. recouping significant capital gains early.   Most borrowers will never meet all of these requirements; therefore, they will never pay recapture tax.

Borrowers can qualify for the bond program by satisfying the following guidelines:  

  • You must be a first time homebuyer, and have not owned a home in the last 3 years, or you purchase a home in a Target Area
  • Your total gross household income must be considered low to moderate by federal law and is adjusted by the number of legal residents in your household; for example, in a Target Area, a one person household can earn up to $72,384 per year
  • Your purchase price is limited again by federal mandate and is dependent upon the number of units (1-4) and if it falls in a Target Area or not; for example, a one-unit residence in a Target Area can sell for no more than $398,315
  • You must occupy the home as a principal residence within 60 days of closing
  • The residence must be 4 or fewer units to qualify within the city limits
  • First-time borrowers must receive pre-purchase counseling from an approved source prior to final approval

This is only a summary of the requirements under this program, and the city of
Chicago reserves the right to change the parameters concerning income and purchase price limits periodically.  Participation in this program has blossomed exponentially.   The City and its investment partners have been inundated with an excessive reservation for funds that the entire program is being reviewed for improvement.   Borrowers must be patient with the system, therefore it is highly recommended to get approval no later than 45 days prior to closing day.   Don™t look for a quick closing timetable using the Bond Program; apply early.   Applications and additional information are available through your participating mortgage banker, Michael Amers.   To find out if you qualify for this and other programs, email me at Michael@chicagobancorp.com.

© 2007 Michael S. Amers

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