FAQ - Frequently Asked Questions
What is a Land Trust?
A Land Trust is a 501c3 membership organization that promotes affordable homeownership opportunities. Land Trusts own the land containing the improvements. The improvements (the house) are owned separately from the land. Homeowners lease the land through a ground lease. The land trust exists in perpetuity.
How is a land trust home different from a conventional home?
A Land Trust home is similar in many ways to a conventional home. Homeowners utilize and make improvements as they would any other home. Some major improvements require the approval of the Land Trust. This is so that improvements do not make the home unaffordable for future buyers. A resale formula determines the sales price when a homeowner is ready to sell. The formula is designed to keep the home affordable into the future. Homeowners become members of the Land Trust organization and have a say in all decisions affecting the land trust community.
What credit score do I need to qualify?
There is no definitive minimum credit score required. Your credit history must be acceptable to the lender and each lender has their own standards. Lenders will take your entire financial situation into account.
How do I qualify?
Applicant must be a first-time homebuyer and must have household income of less than 60% of Chicago area median income. Credit score must be acceptable to lender. Unpaid collections, judgments, or charge-offs are not acceptable. Any bankruptcy must have been discharged for at least 2 years. Applicants cannot have unpaid child support or unpaid City fees. Applicants must have a general history of on-time payments.
What if I qualify and then my income goes up?
Applicant’s income must be under the income limit at the time of closing. Post purchase, if homeowner’s income goes up it does not disqualify the homeowner from living in the home.
Who controls the Land Trust?
The Land Trust is controlled and governed by its members. Land Trust homeowners are members along with other community residents. Members elect a Board of Directors.
What does it cost to rent the land?
The monthly rental cost is quite modest at $50 per month.
What are the advantages of owning a Land Trust home versus renting?
Homeownership provides you with substantial tax advantages. Homeowners build up equity with each payment. You obtain a sense of ownership and no one can make you move. Homebuyers also have a say in their community.
What might my monthly payments look like?
The monthly payment will consist of five different parts including principal, interest, taxes, insurance, and the community land trust assessment For example, assuming a first mortgage of $105,817* at a rate of 6% for 30 years, the estimated principal and interest payment would be $634.37. Additional monthly costs include real estate taxes, insurance and assessment, which are currently estimated at $300.00. Your total monthly payment will be $934.37. The monthly payment will vary based upon the amount that you borrow, the interest rate, and term of loan offered by the bank.
*(Based upon a sales price $167,967 less down payment of $2,500, down payment assistance of $3,000, city subsidies of $40,000, and IHDA subsidies of $16,650).
Where are the new homes being built?
The First Community Land Trust of Chicago homes will be built on the 400 and 500 blocks of North Hamlin.