Illinois is a great place for veterans to plant roots, not only for its communities like Rockford and surrounding Winnebago County, but also because of the state-specific benefits available to veteran homeowners. Too often, I meet veteran clients who had no idea they qualify for significant savings on property taxes or other housing perks. In this post, we’ll unlock those Illinois-specific veteran housing benefits – with a special focus on the homestead exemptions that can save you thousands. Knowledge is power (and savings!), so let’s make sure you’re equipped to take full advantage. Part of being a veteran friendly real estate agent is ensuring you maximize every benefit you’ve earned, both federal and state.
VA Home Loan Guaranty
Before diving into state programs, let’s acknowledge the foundation: the VA Home Loan itself. This is a federal benefit that Illinois veterans can utilize to buy or refinance a home with favorable terms (often 0% down payment and no PMI) . The VA guarantees a portion of the loan (usually 25%), which encourages lenders to offer veterans more lenient terms . According to the Illinois Dept. of Veterans’ Affairs, a VA guaranteed loan can be used to buy, build, repair, or improve a home – or even refinance an existing mortgage . The key requirement is that you have a good credit record, sufficient income, and you’ll use the home as your primary residence . Why mention this in a post about Illinois benefits? Because the state’s own guides encourage veterans to use their federal VA loan benefit as part of achieving stable housing. As a VA benefits expert in Rockford, IL, I can help you combine your federal benefits with state programs for maximum effect.
Illinois Homestead Exemptions for Veterans
Illinois offers property tax relief to qualifying veterans through homestead exemptions – essentially reductions in the assessed value of your home for tax purposes. Lower assessed value = lower property tax bill. Here are the big ones to know: Returning Veterans’ Homestead Exemption (RVHE): This is a one-time (actually, two-year) benefit to welcome you home from active duty. Returning veterans get a $5,000 reduction in the equalized assessed value (EAV) of their primary residence for the tax year they return from active duty and the subsequent year . For example, if you served overseas and came back in 2025, you can apply and get the break for 2025 and 2026 tax years. This is basically a “welcome home” thank-you that can save a few hundred dollars (or more) each year in property taxes, depending on your local tax rates. Just remember to apply for it – it’s not automatic. I always remind my clients about filing for this when we close on a home and they’ve recently returned from service. Disabled Veterans’ Standard Homestead Exemption (DVSHE): This is a major property tax savings for veterans with service-connected disabilities. The exemption amount depends on your VA disability rating: If you’re 30% to 49% disabled, you get a $2,500 reduction in your home’s EAV 50% to 69% disabled earns a $5,000 reduction in EAV 70% or more disabled? You are exempt from all property taxes on your primary residence in Illinois ! That’s right – 0$ in property tax. This can amount to thousands of dollars in annual savings, effectively making homeownership much more affordable over the long term. (Note: if you’re 70%+ disabled, your surviving spouse can also benefit – they remain exempt on that home’s taxes as long as they stay unmarried and continue to live there, per Illinois law.) As you can imagine, this homestead exemption is huge. For example, I helped a 100% disabled veteran buy a home in Winnebago County last year – the property tax bill went from about $4,000 a year to $0 once he filed for the exemption. That’s money back in his pocket every year, which can go toward maintenance, family needs, or just quality of life. You earned this through your sacrifice, so don’t miss out on it.
Applying for Homestead Exemptions: These exemptions are administered at the county level (through your County Assessor’s Office). You typically need to fill out a form and provide documentation (like your VA disability award letter for DVSHE, or your DD-214 and orders for RVHE). And heads-up: you must re-file the Disabled Veterans exemption each year with current documentation . It’s an annual paperwork drill, but well worth the effort. I advise putting a reminder on your calendar every year to renew it. I also keep local assessor office contacts handy – for Winnebago County, the Supervisor of Assessments can guide you on the exact forms.
Additional Illinois Housing-Related Benefits for Veterans
Specially Adapted Housing Tax Exemption: If you’re a veteran who has used a federal VA Specially Adapted Housing (SAH) grant to purchase or modify a home to accommodate a disability, Illinois rewards that. You can get a property tax exemption up to an additional $100,000 off the home’s assessed value for the adapted residence . This is on top of any other exemption. Essentially, the state recognizes that severely disabled veterans who need home modifications should get extra relief. If this applies to you, make sure to file the appropriate form (usually a PTAX form in Illinois) to claim it.
Mobile Home Tax Exemption: Illinois even considers those vets living in mobile homes. If you’re a disabled veteran living in a mobile home that you own and use as your primary residence, you’re exempt from the Mobile Home Local Services Tax (basically, the annual tax mobile home owners pay in lieu of property tax) . This can save a few hundred dollars per year. Again, you’d apply through the county, showing proof of disability and mobile home ownership.
Illinois Veteran Housing Grants: While Illinois doesn’t directly give out cash for buying a home (aside from the tax breaks above), they do have some grants focusing on housing. For instance, the Illinois Affordable Housing Trust Fund and certain Illinois Housing Development Authority (IHDA) programs sometimes allocate funds or special loan programs for veterans. One past program was “Welcome Home Heroes,” which offered down payment assistance to veterans and active military homebuyers in Illinois. These programs come and go, so it’s worth checking with IHDA or a knowledgeable lender about current offerings. As of 2025, IHDA’s primary programs (like first-time buyer down payment assistance) can be used in conjunction with VA loans – and veterans are often given priority or waived requirements (for example, the first-time buyer requirement is usually waived for veterans).
State License Fee Waivers and Other Perks: Homeownership involves more than just buying the house – there’s upkeep, etc. Illinois provides some small perks that indirectly help your wallet. For example, disabled vets get free fishing and hunting licenses in Illinois , which, if you’re an outdoor enthusiast, saves you license fees (and maybe provides dinner if you’re a good angler or hunter!). There’s also a State Parks admission benefit – honorably discharged Illinois veterans get free access on certain dates. These aren’t housing benefits per se, but they contribute to your overall cost of living enjoyment of your property (think free camping trips, etc.).
No State Tax on Military Retirement Pay: This isn’t a housing benefit, but it’s worth noting as you
budget for a home: Illinois does not tax military retirement income . So if you’re retiring or retired military living in Illinois, your pension is state-tax-free. This means more take-home income, which could help you qualify for a larger mortgage or just make monthly expenses easier to handle. Many states don’t offer this, but Illinois does – it’s a veteran-friendly tax environment.
Getting Help Navigating Benefits
Feeling a bit overwhelmed by the alphabet soup of programs? You’re not alone – but help is available. The Illinois Department of Veterans’ Affairs (IDVA) has Veteran Service Officers (VSOs) whose mission is to help you identify and apply for every benefit you qualify for . They act as your advocates, assisting with paperwork for both federal and state benefits. We have an IDVA field office right here in Rockford (at the VA Outpatient Clinic on Featherstone Rd). I often refer my clients there if they have questions about disability compensation or need help filing for these exemptions. The IDVA can also help you navigate any bonus programs (Illinois offers cash bonuses for certain war-era veterans), education benefits, and more, which can all indirectly improve your financial readiness for homeownership. The key point: you don’t have to figure it all out alone.
As your local veteran Realtor in Winnebago County, I make it part of my service to ensure you’re aware of these benefits and to provide guidance. For instance, at closing I’ll hand you information on the homestead exemption applications relevant to you. If you’re 100% disabled, we’ll have that DVSHE form ready to go. If you’re a first-time buyer using an IHDA program, I’ll coordinate with your lender to align it with your VA loan.
