You graduated, landed a job, and now you're watching Old Town rents climb every year while your landlord pockets money that could be building your equity. The math starts to feel obvious. But then you open your student loan portal, look at your balance, and wonder if homeownership is even on the table for someone in your position. It is — but you need a clear-eyed plan, not a motivational speech.
Old Town is one of Chicago's more expensive neighborhoods. Prices along the north end near Armitage and Wells run higher than what you'll find in many other parts of the city, and competition for well-priced units moves fast. That said, recent graduates with solid employment, manageable debt-to-income ratios, and the right loan program can and do buy here. Here's how to think through it.
Getting Your Financial Picture Right
The first thing any lender is going to do is look at your debt-to-income ratio, commonly called DTI. For most conventional loans, you want your total monthly debt payments — including the new mortgage — to stay under 43 to 45 percent of your gross monthly income. Student loans factor in directly.
If your loans are on an income-driven repayment plan, some lenders will use the actual payment showing on your credit report. Others, particularly those offering conventional loans backed by Fannie Mae or Freddie Mac, may use 1 percent of your outstanding balance as the assumed monthly payment if your current payment is very low. This distinction matters a lot. A $60,000 loan balance on an income-driven plan might show a $200 monthly payment on your statement, but a lender applying the 1 percent rule would count $600 against your DTI. Ask your lender specifically which method they use before you assume anything.
If your loans are in deferment, do not assume they won't count. Most lenders will still factor them in. Get clarity on this upfront.
The loan programs worth knowing about as a first-time buyer with student debt include FHA loans, which allow down payments as low as 3.5 percent with a credit score of 580 or above and are often more forgiving on DTI; conventional 97 loans, which require just 3 percent down; and the Illinois Housing Development Authority (IHDA) programs, which offer down payment assistance specifically for Illinois first-time buyers. The IHDA Access Forgivable program, for example, has provided grants that don't need to be repaid if you stay in the home for a set number of years. These programs have income limits and purchase price caps, so you'll need to verify current eligibility with an IHDA-approved lender.
One practical step: get pre-approved, not just pre-qualified. In Old Town's market, a pre-qualification letter carries almost no weight with a listing agent or seller. A full pre-approval, where the lender has actually verified your income, employment, and credit, tells sellers you are a serious buyer.
What Your First Job Income Actually Gets You in Old Town
Old Town's condo market is where most first-time buyers enter the neighborhood. One-bedroom condos in the area have generally ranged from the low $200,000s to the $400,000s depending on the building, floor plan, finishes, and whether parking is included or deeded separately. Two-bedrooms stretch further up from there.
Using a rough estimate: with a 5 percent down payment on a $300,000 condo, you're looking at a $285,000 loan. At current rates, that puts your principal and interest payment in the $1,800 to $2,000 range before HOA dues, property taxes, and homeowner's insurance. HOA dues in Old Town condo buildings vary considerably — buildings with amenities like a doorperson, fitness center, or rooftop tend to run higher, sometimes $500 to $700 or more per month. More modest vintage walk-up buildings may come in well under that.
Property taxes in Chicago are notoriously complex, and they can change after a sale if the property is reassessed. Pull the current tax bill on any property you're seriously considering, and remember that Illinois has a Homeowner Exemption and a Homestead Exemption that reduce your taxable value once you occupy the home as your primary residence. Your lender and your attorney will walk you through the specifics.
The point is that your monthly all-in number may be closer to renting in Old Town than you expect — or it may be higher. Run the actual numbers for specific properties, not hypotheticals.
Navigating Condos in Old Town: What to Ask Before You Write an Offer
Most of the inventory accessible to first-time buyers in Old Town will be condos, and condos require a layer of due diligence that single-family homes don't. Before writing any offer, ask the listing agent four specific things: What is the reserve fund balance? Are there any upcoming special assessments? Have there been any past special assessments? And are there any known major issues with the building?
A building with a thin reserve fund is a financial risk. If the roof needs replacing or the elevator fails, a building without adequate reserves may levy a special assessment against unit owners — sometimes for thousands of dollars — to cover the cost. A building with a healthy reserve fund has been collecting money over time and is better positioned to handle capital expenses without hitting owners with unexpected bills.
Past special assessments can tell you about the building's history. One moderate assessment years ago for a legitimate capital improvement is different from a pattern of repeated assessments or a recent large one.
Everything else — the meeting minutes, bylaws, rules and regulations, the 22.1 disclosure from the association, and HOA financial statements — gets reviewed after you go under contract, during the attorney review period. That's when your attorney will dig into those documents and flag anything concerning. Do not skip attorney review. In Illinois, it is a standard part of the transaction, and for condo purchases in particular, it provides an essential layer of protection.
Also confirm before writing an offer whether the building is approved for the loan type you're using. FHA financing, for example, requires the building to be on an approved list or go through a spot approval process. Not every Old Town condo building qualifies. If you're using FHA, your agent needs to check this early.
The Timeline Reality for a Recent Graduate
If you started your first job in the last few months, some lenders will want to see at least 30 days of pay stubs, and some may want more employment history depending on your industry and loan type. If you're in a field where you received a signed offer letter before graduating, some lenders will count that. If you're self-employed or contract-based, the documentation requirements are significantly more involved.
The practical timeline for most recent graduates: get your finances organized now, spend a few months building up your down payment and reserves, get pre-approved, and then start actively searching. Do not plan to close within days of starting your job. Give yourself runway.
Also understand that lenders want to see cash reserves after closing — typically two to three months of mortgage payments in the bank after your down payment and closing costs are covered. Closing costs in Chicago typically run 2 to 3 percent of the loan amount on top of your down payment, though this varies. Knowing this upfront means you're not scrambling at the finish line.
Working with the Right Agent in Old Town
Old Town moves fast on well-priced units. You need an agent who knows the difference between a building that will pass FHA approval and one that won't, who can read a reserve fund situation before you fall in love with a unit, and who won't waste your time writing offers on condos that don't fit your financing.
Choosing an agent is one of the most consequential decisions in this process. A detailed breakdown of what to look for in a Chicago REALTOR is worth reading before you start interviewing agents.
Riley Hextell is ranked number one at eXp Realty Illinois for total transactions in 2025 and is in the top 50 of more than 80,000 agents companywide. He is a US Navy veteran, the 2024 Chicago Association of Realtors Rookie of the Year, and has over 135 five-star Google reviews from clients across Chicago. He works regularly with first-time buyers navigating exactly the kind of situation described in this article — student loans, new jobs, and a real desire to stop renting and start building equity.
You can reach Riley at 815-545-7476, [email protected], or rileyhextell.com.
If you're also thinking about how couples coordinate their finances and search process when buying together, the guide on finding your first place together in Roscoe Village covers a lot of the same financial alignment questions that apply even if you're buying solo.
Frequently Asked Questions
FAQ: Do student loans prevent you from buying a home in Old Town?
No, but they affect your debt-to-income ratio, which determines how much you can borrow. The key is working with a lender who knows how to handle student loans correctly — especially if you're on an income-driven repayment plan — and selecting a loan program that fits your profile. Many buyers with significant student debt have purchased in Old Town by choosing the right program and lender.
FAQ: What loan programs are available for first-time buyers in Illinois with student debt?
FHA loans, conventional 97 loans, and IHDA programs are the main options. IHDA's Access Forgivable program has offered down payment assistance grants for eligible buyers. Each program has its own income limits, purchase price caps, and requirements, so you'll want to speak with a lender familiar with Illinois-specific programs to determine what you qualify for.
FAQ: What should I ask about an Old Town condo building before making an offer?
Before writing an offer, ask the listing agent about the reserve fund balance, whether there are any upcoming special assessments, whether there have been past special assessments, and whether there are any known major building issues. Documents like meeting minutes, bylaws, and financial statements are reviewed after going under contract during the attorney review period, with your real estate attorney guiding you through them.
FAQ: How long do I need to be employed before I can get a mortgage?
Most lenders want at least 30 days of pay stubs at minimum, and some want more depending on your employment type and loan program. If you received a formal offer letter before graduating, certain lenders may count that toward your employment history. Self-employed or contract workers face more documentation requirements. Getting pre-approved early in your job will clarify exactly what your lender needs from you.