New Market Mortgage

Chicago's first-time homebuyer specialist

FHA Loans in Chicago — 3.5% Down, Credit From 580

The most flexible path to homeownership for first-time buyers in Chicago and the surrounding Illinois market.

Why FHA Loans Chicago?

  • 3.5% down payment on a standard FHA loan

    On a $325,000 Chicago starter home, that's $11,375 down — dramatically less than the 20% conventional standard. And the down payment can come from gift funds or other approved sources.

  • Credit scores as low as 580 (or 500 with 10% down)

    FHA is forgiving on credit history. Past bankruptcies, foreclosures, and medical collections don't automatically disqualify you. We work with imperfect credit every day.

  • Higher DTI flexibility than conventional loans

    FHA allows debt-to-income ratios up to 50% with compensating factors. If student loans or a car payment would push you over a conventional limit, FHA often still works.

  • Compatible with down payment assistance programs

    FHA loans work with gift funds, grants, and state down payment assistance. If you're considering Illinois IHDA Access programs (up to $15,000 toward down payment and closing costs), we'll walk you through how they work — IHDA assistance must be originated through an IHDA-approved participating lender, and we'll help you decide whether that path or an FHA we can originate directly fits your situation best.

  • Assumable loan — a hidden long-term benefit

    If you sell your home while FHA rates are lower than prevailing rates, a future buyer can assume your mortgage at your original rate. That's a real selling point.

Frequently asked questions

What credit score do I need for an FHA loan?
FHA technically allows scores as low as 500 with 10% down, or 580 with just 3.5% down. Most lenders prefer 580–620 minimum. We'll pull a soft credit check during pre-approval at no cost to confirm your tier.
Can I use gift funds for my FHA down payment?
Yes. The entire 3.5% down payment can be a gift from a family member, employer, or charity. We'll walk you through the gift letter and documentation requirements so the underwriter accepts it cleanly.
How much is FHA mortgage insurance?
FHA requires an upfront 1.75% premium (rolled into the loan) plus monthly mortgage insurance at roughly 0.55% annually. For a $325,000 loan that's about $149/month. Unlike conventional PMI, FHA mortgage insurance stays for the life of the loan unless you put 10%+ down.
Can I use an FHA loan for a condo in Chicago?
Yes, but the condo building must be on the FHA-approved list. Many Chicago condo buildings are already approved; for those that aren't, we can check the list and sometimes help the HOA pursue approval.
Can I get an FHA loan after bankruptcy or foreclosure?
Typically yes after a 2-year waiting period for Chapter 7 bankruptcy (discharge date) and 3 years after a foreclosure. We handle post-bankruptcy files often — come talk to us to check your eligibility date.

Keep exploring

Illinois IHDA assistance
The four IHDA Access programs explained
FHA vs Conventional
Which loan type saves you more?
First-time buyer guide
Chicago-specific homebuying walkthrough
Estimate your payment
See the numbers on 3.5% down
Mark Daszynski

Mark Daszynski

Mortgage Broker

NMLS #220036

35+ years in mortgage lending

Prefer to talk?

(773) 777-4434

Mon–Fri 9am–6pm CT

NMLS #232966 | Illinois Residential Mortgage Licensee MB.6760225