FHLBank Chicago Unveils $55M Program to Boost Housing and Local Economies

CHICAGO, IL – January 02, 2026 – The Federal Home Loan Bank of Chicago (FHLBank Chicago) is injecting a significant stream of capital into Illinois and Wisconsin, announcing the launch of its expanded Community Advance program for 2026. Backed by a $55 million interest rate subsidy, the initiative is designed to provide low-cost funding to member financial institutions, directly fueling the development of affordable housing and bolstering small business growth across the two states.

The move comes at a critical time for the region. While housing markets in both Illinois and Wisconsin are projected to see modest growth in 2026, persistent affordability challenges, influenced by years of price appreciation and fluctuating interest rates, continue to sideline many potential homebuyers and strain community resources. This program aims to counteract those pressures by making it cheaper for local lenders to finance essential community-building projects.

A Strategic Injection of Capital

The cornerstone of the 2026 initiative is the substantial increase in financial firepower. FHLBank Chicago has doubled the per-member outstanding Community Advance limit from $250 million to $500 million. This, combined with the $55 million pool of subsidies, dramatically expands the amount of capital that can be deployed for housing and economic development.

This expansion is particularly timely. In Illinois, median home prices are forecast to climb by over 3%, with the Chicago metropolitan area potentially seeing nearly 5% growth. Similarly, key markets in Wisconsin, like Madison, anticipate price appreciation between 3-5%. While this signals a stable market, it also underscores the ongoing need for affordable housing solutions. The Community Advance program addresses this by offering member institutions interest rate discounts of up to 200 basis points (2.00%), a significant reduction that can make or break the financial viability of a new housing project or a small business expansion loan.

The program's design allows this capital to flow directly into construction and rehabilitation of housing, as well as providing funding for non-depository Community Development Financial Institutions (CDFIs) and nonprofit mortgage originators—entities that are often on the front lines of serving low- and moderate-income communities. By lowering the cost of funds for these projects, the bank's initiative is expected to stimulate construction activity, create jobs, and foster a more resilient local economic base.

Empowering Local Lenders on the Front Lines

FHLBank Chicago, a cooperative owned by its member institutions, does not lend directly to the public. Instead, it functions as a "bank for banks," providing liquidity to over 760 members, including community banks, credit unions, insurance companies, and CDFIs across Illinois and Wisconsin. The Community Advance program is a prime example of how this model empowers local institutions to better serve their customers.

These local lenders have deep roots in their communities but often lack the scale to access global capital markets on their own. The advances from FHLBank Chicago provide them with a reliable and low-cost source of funding. The subsidies offered through the Community Advance program sweeten the deal, enabling them to offer more competitive rates on loans for affordable housing and small business creation.

The impact is tangible. CoVantage Credit Union, a member institution, leveraged the program to finance critical housing projects. “CoVantage Credit Union used the Community Advance to secure funding at a competitive discount, enabling the construction of three multifamily units in Illinois and 12 single family homes in Wisconsin,” said Mary Massey, Chief Financial Officer at the credit union. She highlighted the program's efficiency, noting, “The combination of the webinars, platform, and member support made the process clear and efficient, enabling us to obtain reduced borrowing costs without impacting our members' construction timelines.”

This testimonial underscores the program's dual benefit: it provides essential capital while also streamlining the application and funding process, ensuring that projects can move forward without delay.

The Mechanics of Community Investment

Beyond the headline numbers, the 2026 Community Advance program includes several structural enhancements designed to maximize its accessibility and impact. One of the most significant features is the expanded eligibility criteria. The program now covers all eligible small business loan originations with no area median income limit, a change that broadens its economic development scope considerably.

Furthermore, eligibility has been extended to include the financing of mortgage-backed securities, mortgage revenue bonds, and projects utilizing low-income housing tax credits (LIHTCs). This allows member institutions to use the subsidized advances in more sophisticated financing structures, unlocking more opportunities for large-scale affordable housing development.

Critically, the program continues to feature no match funding or retention requirements. This removes a common barrier for smaller institutions, which may not have the liquid capital to meet matching fund mandates, making the subsidized funding more accessible to a wider range of members. Advances are available with both floating and fixed rates, giving members flexibility in managing their interest rate risk.

To further simplify access, FHLBank Chicago provides an online subsidy calculator, allowing members to quickly estimate their potential discount when applying for an advance. The application window is open for the entire calendar year, from January 2 through December 31, 2026, with the $55 million subsidy allocated on a first-come, first-served basis.

A Pillar of Regional Development Finance

The Community Advance program is a key component of FHLBank Chicago's broader mission, which is rooted in the mandate of the Federal Home Loan Bank System. Established by Congress in 1932, the FHLBank System is a government-sponsored enterprise (GSE) designed to ensure a stable and reliable flow of credit for housing and community investment. As one of 11 regional FHLBanks, FHLBank Chicago plays a vital role in providing liquidity to the financial institutions that power local economies in Illinois and Wisconsin.

This initiative complements the bank's other community-focused offerings, such as the Downpayment Plus® (DPP®) Program, which provides down payment and closing cost assistance to eligible homebuyers, and special pricing grids within its Mortgage Partnership Finance® (MPF®) Program. By offering a suite of products, the bank creates a multi-layered support system for its members and their communities.

While other FHLBanks have similar community investment programs, Chicago’s commitment of a $55 million annual subsidy for this specific advance product represents a substantial and focused investment in the region. It positions the bank not merely as a source of liquidity, but as a strategic partner actively working to solve pressing social and economic challenges. This proactive approach to development finance helps strengthen the entire regional financial ecosystem, ensuring that even the smallest towns have access to the capital needed to build affordable homes, launch new businesses, and thrive.

The expanded program underscores a commitment to innovative funding solutions that directly address the supply of affordable housing and the economic vitality of communities throughout its district.