| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.958% | 7.078% |
| 15-year fixed | 6.311% | 6.447% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | N/A | N/A |
Do you want to buy a home in Illinois? If so, it’s important to understand mortgage rates, what they mean and what’s considered a good rate so you get a mortgage that fits your needs. Lenders will consider different factors when they approve you for a loan and what your mortgage rate will be. Here’s how to make sure you’re prepared.
The Best Mortgage Lenders in Illinois for Rates:
- Best Overall in Illinois: Quicken Loans®
- Best for Quick Approvals: Rocket Mortgage®
- Best for Already-Existing Customers: Chase
- Best for Buyers with Unique Circumstances: Citibank
- Best for Low Mortgage Rates: guaranteed Rate
- Best for Self-Employed in Illinois: CrossCountry Mortgage
- Best for VA Loans: Veterans United
What Is a Mortgage Rate?
The mortgage rate is the rate of interest that you will be charged on the mortgage itself, and it comes in the form of a percentage. Mortgage rates are determined by lenders and are based on how much of a risk they think you are as a homebuyer.
The more financially secure a lender thinks you are, the more likely you are to get a lower mortgage rate. The mortgage rate is there as security for the lender so it can get its money back quickly in case you default on the loan in the future. This because a portion of every monthly mortgage payment goes toward interest.
What Factors Impact Your Mortgage Rate?
There are many different factors that your mortgage lender will need to take into account as it determines your mortgage rate.
Credit Score
Your credit score is a number between 300 and 850. That number is based on several factors, such as how much debt you carry on your credit cards, whether you have student loans, late payments, how many balances you carry, the length of your credit history, etc. The higher your credit score, the better chance you have at getting a lower mortgage rate.
Debt-to-Income Ratio
Another factor that’s calculated is your debt-to-income (DTI) ratio. Your DTI is much debt you have in comparison to how much money you make. A low DTI means that you have better budgeting habits, which can lower your mortgage rate.
Down Payment Amount
The amount you’ll have to put down to buy a home will vary depending on the type of loan you take out. You’ll likely be offered a lower mortgage rate if you’re able to put down more money upfront when you buy your home.
Loan Type
There are many different loan types out there, some of which are a better fit for first time buyers and some that are a better fit for those who want to refinance. Each loan type may have different mortgage rates, which we’ll also explain in further detail later on.
Loan Terms
Your mortgage rate can also be impacted by your loan term and whether you plan to pay it back in 10 years, 15 years or 30 years. Generally, the shorter the term, the lower the mortgage interest rate.
Home Location
Where you plan on buying a home is a major determining factor that spells out your mortgage rate. States (and even cities) have varying rules on mortgage rates. This is important to consider when you apply for a mortgage in Illinois because what you can be offered will be different than what’s offered in other states.
What Is a Mortgage Type?
Mortgage rates are often directly tied to the type of mortgage you take out. There are many different mortgage types out there. It’s important to understand the differences between them all so that you know which type is best for you and your finances.
Conventional Loans
A conventional mortgage is a mortgage that isn’t insured by the federal government. Some conventional mortgages meet federal guidelines (these are conforming loans) and some do not (these are non-conforming loans). Conventional loans typically require a 3% down payment. However, you’ll need to have a lot of good credentials, such as a credit score above 620. You’ll be required to pay private mortgage insurance (PMI) on your loan if you put down less than 20% for a down payment, which can add to your costs.
FHA Loans
FHA loans are government-backed loans from the Federal Housing Administration. These loans were created in the 1930s to regulate rates and help families afford their first home. Down payments are typically quite low and mortgage rates cannot be any higher than 3.5%. Best of all, you don’t need excellent credit to get approved for an FHA loan (as low as 500 in some cases is okay). You’ll have to pay 2 insurance premiums, which can raise the overall price of the loan.
USDA Loans
USDA loans are another type of government-backed loan — they’re backed by the U.S. Department of Agriculture. They’re ideal for people with lower incomes who want to buy a home in a rural area. The home must be in a USDA-eligible area to qualify. A down payment is not required in some cases.
VA Loans
VA loans are another type of government-backed loan designed for active military, veterans and their families. These loans have low mortgage rates, do not require a down payment or private mortgage insurance (PMI) and also offer other cost-saving benefits.
What Is a Mortgage Term?
A mortgage term refers to how many years a mortgage will last. The idea is that most people will pay off their entire mortgage by the end of the term. Some people change their mortgage term by refinancing, which means you change your loan.
30-Year Fixed
A 30-year fixed mortgage is a loan that lasts 30 years. The mortgage rate you were given when you got the loan remains the same for the life of the loan, which means your monthly mortgage payments should stay the same (excluding taxes and insurance). However, it is important to consider closing costs and home insurance when calculating the total cost of your home loan.
15-Year Fixed
A 15-year fixed loan is similar to the 30-year fixed loan but you pay it off in half the time. The monthly payment amount comprises the principal and interest rate and is featured in an amortization schedule. Amortization shows you how your payments spread out across your mortgage term. You should have your entire loan paid off in 15 years as long as you don’t miss a payment.
5/1 ARM
An adjustable-rate mortgage, or ARM, is a loan with a mortgage rate that is not fixed and can change, usually every year. A 5/1 ARM means that your initial mortgage rate will be locked in for the first 5 years of a mortgage before it changes.
Current Mortgage Rates in Illinois
Mortgage rates in Illinois are not only determined by the borrower’s credentials, but also by the state of the economy. Let’s say the economy is good and prices are fair — that’s in part due to reasonable mortgage rates and vice versa. Economic indicators can impact mortgage rates and so can tax laws and the housing market in general.
You’ll see gradual changes in mortgage rates no matter what. They won’t necessarily change from year to year, they actually change from one decade to another. Here are the most up-to-date rates from Benzinga so you know exactly what you can expect.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.958% | 7.078% |
| 15-year fixed | 6.311% | 6.447% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | N/A | N/A |
Calculating Interest in Illinois
As you calculate interest in Illinois, the important thing to know is that mortgage rates are usually calculated on a monthly basis. The cost of your mortgage (your principal) will be multiplied by the interest rate (annual percentage rate, or APR), and then divided by how many months are in the year.
Each time the principal balance on your mortgage rate goes down because you’ve made a payment, your interest rates also go down. You’ll pay the same amount every month over time and will start to pay more to the principal instead of the interest rate.
| City | Average Home Value | Loan Term | Current Rate | Downpayment (20%) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Springfield | $110,300 | 30-year fixed | 6% | $22,060 | $529.04 | $102,214.40 |
| Chicago | $227,300 | 30-year fixed | 6.526% | $45,460 | $1,152.46 | $233,045.60 |
| Peoria | $89,100 | 30-year fixed | 0% | $17,820 | $0.00 | -$71,280.00 |
| Rockford | $88,300 | 30-year fixed | 0% | $17,660 | $0.00 | -$70,640.00 |
Lender Credit Score Minimums in Illinois
Your credit score tells your lender how much of a risk you are if it lends you money for a mortgage. The higher your number, the more you can be trusted by your lender to make your payments because it signals that you’ve been responsible with credit in the past. Lenders will require specific minimums on your credit score when you apply for a mortgage.
| Lender | Minimum Credit Score Required |
|---|---|
| Chase | 620 |
| Citibank | 620 |
| Guaranteed Rate | 620 |
| Quicken Loans® | 620 |
| Rocket Mortgage® | 620 |
7 Best Mortgage Lenders in Illinois
Once you’re sure that your credit score is where it needs to be, you’ll have to dig further to see which lender in Illinois is right for you.
- Online Service
1. Best Overall: Quicken Loans®
Quicken Loans® offers a convenient online application process to get a mortgage. It’s a major draw for homebuyers since employment and income can be instantly verified for over 60% of U.S. applicants and can speed up the loan processing time.
Quicken Loans® is one of the top lenders across the nation, particularly for FHA loans. It offers FHA, VA, USDA, conventional fixed, jumbo and refinancing loans.
You’ll need a 620 credit score for approval (580 for FHA loans) and should be ready to provide a down payment of 3%. On the downside, Quicken Loans® does not offer home equity loans or HELOCs and does not consider alternative credit.
- Online Mortgages
2. Best for Quick Approvals: Rocket Mortgage®
Though many mortgage lenders allow you to apply online, Rocket Mortgage® has the best entirely digital process and connects to other financial institutions so you can upload all the documents necessary for approval.
- Banking and Mortgages
3. Best for Already-Existing Customers: Chase
Would you rather get a mortgage through your bank?
Chase can be a great option if you’re a Chase customer — you’ll find many discounts available for those who bank with Chase.
The lender is also great for a face-to-face application experience.
- Banking Services
4. Best for Buyers with Unique Circumstances: Citibank
Citibank also offers discounts for Citibank customers.
Mortgages through Citibank are best for those who may have a difficult time meeting all the requirements that lenders ask for.
Citibank takes into account unique situations that may impact how your credit looks on paper and it helps you get into a home with low down payment options.
- Personalized support
5. Best for Low Mortgage Rates: guaranteed Rate
guaranteed Rate, while it may not be as well known as other lenders, is gaining more popularity due to its competitive mortgage rates (hence the name).
Apply easily online through its digital application system and check out dozens of different mortgage options.
- Self-employed Borrowers
6. CrossCountry Mortgage: Best for Self-Employed
CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI.
CrossCountry Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It's also easier to get approved if you're self-employed. You are not required to submit tax returns and you'll only need one year of self-employment income history and a minimum credit score of 580. CrossCountry Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
- Current Service Members
7. Veterans United: Best for VA Loans
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
Understanding Mortgage Rates
As you apply for a mortgage in Illinois, it’s important to understand not just the mortgage rate your lender offers you and whether or not that rate is fixed or adjustable. It also depends on the type of loan you’re getting and its terms. Your mortgage rate will determine how much you will actually end up paying for your home when all is said and done.
Take your time choosing a lender so you get a mortgage that fits your needs. Take a minute to get a mortgage quote so you can sift through your options.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.