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Before You Buy a Home in Bloomington-Normal, IL

Bloomington-Normal, Illinois is a popular place to relocate. You’ve got everything you need in this quiet city: shopping, dining, prominent educational institutions (Illinois State University & Illinois Wesleyan University), art, and a thriving job market. The parks, museums, Route 66, and art festivals keep visitors coming year after year. Many of them decide to stay for the long haul and end up purchasing one of many fine homes available for purchase in the Bloomington-Normal, IL area.


No one wants to experience buyer’s remorse because they’ve hurried to buy what they thought was their dream home. Many people rush into a purchase without thoroughly examining their finances first. Often, people overlook or minimize major problems in a home they tour, only later to regret the buy. In this article, we’ll explore tips for what to do before you buy a home. We’ll explain how to determine what homes you can afford and how to get pre-approved.



Home in Bloomington-Normal, IL Area



How Much Home Can You Afford?

Before you begin your home search, you’ll want to examine your budget and determine how much home you can afford.

First, consider your monthly income. Banks require that your monthly expenses not exceed 28 percent of your monthly income. This is called the 28-36 rule which means your maximum household bills should not exceed 28 percent of your gross monthly pay. This is also referred to as the housing ratio. You can use an online mortgage calculator to calculate this number. This will let you know exactly how much home you can afford.


If you have recurring debts such as credit cards, consider paying these off beforehand. Your total monthly expenses on debt plus new mortgage payments should not exceed a threshold such as 41 percent.

Down Payment

It’s a good idea to start early saving for your home down payment. Lenders prefer that you place a down payment of 20 percent or higher for a conventional home loan. However, there are loan options available for you to put down less than 20 percent, but you’ll be required to pay private mortgage insurance (PMI) which can make your monthly payment considerably higher.

If your down payment is going to be less than 20 percent, then some of the loan options available for you are: FHA, GSE-based, USDA, and VA loans. There may be others, but these are the most popular ones for lower down payments.


FHA stands for the Federal Housing Administration. These loans offer down payments of 3.5 percent and are easier to qualify for.


Government Sponsored Enterprise-backed loans (GSEs) are from Fannie Mae and Freddie Mac. They insure 97 percent loan-to-value loans. This enables banks to offer 3 percent down payment mortgage loans.


The USDA offers U.S. Department of Agriculture loans with low rates and 100 percent financing to buyers in rural and suburban areas.

The VA offers Veterans Administration loans to eligible active duty service members and veterans. With these loans, lenders can offer 3 percent down payment mortgages to those qualified. VA loans require no down payment or mortgage insurance.

Normal, IL Living Room

Get Pre-approved

Now, that you know how much you can afford to spend on a home, it’s a good idea to go ahead and get pre-approved. This means that you will meet with a lender and submit an application along with accompanying financial documents such as pay stubs and a copy of your tax return. The lender will examine your application and then give you a pre-approval letter which lists the amount the lender is willing to loan you should you decide to purchase a home. It’s like a promise from the lender that this is the amount they are willing to loan you.


Searching for a home without pre-approval is like going window shopping. No one will take you seriously, and you could miss out on an ideal home because you’re not prepared to buy as others who have already secured pre-approval.

The Search Begins

Once you’ve received your pre-approval letter, now it’s time for the fun part. And that’s what a home search should be–fun. If it’s not, then you may want to consider hiring an experienced real estate agent.


In Bloomington, IL, you’ll find the median listing price to be around $179,900 or $67 per square foot.  Homes in the area spend an average of 68 days or less on the market. (Source: neighborhoods in Bloomington are: Eagle Crest East, Fox Creek, Founder’s Grove and Old Farm Lakes. Nearby cities like Normal, Hudson, Downs, Le Roy, and Heyworth are also popular in the Central Illinois housing market. (Source:


Janet Jurich Realty Group can help you find a home to fit your budget and requirements. We have many years of experience and local knowledge of the Bloomington-Normal real estate market.


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