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• Mortgage rates in Illinois are influenced by economic indicators and a borrower’s financial profile.
• Fixed-rate mortgages mean monthly payments stay the same. Adjustable-rate mortgages have rates that can fluctuate up or down.
• The better a buyer’s credit and the more money they can put down, the lower the interest rate.
• First-time homebuyers can tap into assistance programs for help with down payments and closing costs.
• Closing costs usually fall between 2% and 5% of the total loan amount.
Introduction to Mortgage Refinance Rates
Welcome to our comprehensive guide to mortgage rates in Chicago. If you’re buying a home in the Windy City, you’re probably also in the market for a home loan. This article is designed to help you gain a solid understanding of how Chicago mortgage rates are determined and, more importantly, how you can secure the lowest possible rate for your upcoming home purchase. Taking the time to learn could save you significant money down the line. Step one? Understand how lenders set mortgage rates in the first place.
First-time homebuyer programs usually consider anyone who hasn’t owned a home in the previous three years to be a “first-timer.” If you think you might qualify as a first-time homebuyer, you could enjoy special benefits such as lower down payment minimums, grants, and closing cost assistance.
Where Mortgage Rates Come From
Mortgage rates are influenced by a number of economic factors that fall into two big buckets: economic factors, which are beyond your control, and personal factors (that’s where you come in). Let’s break it down.
Economic Factors Influencing Mortgage Rates
• The bond market, particularly the 10-year U.S. Treasury Note, is a primary indicator of where mortgage rates are headed. When its rates rise, mortgage interest tends to head in the same direction.
• The health of the housing market plays a role too. When the housing market cools, lenders may lower rates to keep attracting customers.
• Inflation and unemployment are also important. When the economy is strong, mortgage rates tend to rise. A recession is usually accompanied by lower mortgage rates.
Borrower Factors Influencing Mortgage Rates
• Your credit score is a significant predictor of the rate you’ll be offered. The higher the score, the lower the rate you’ll likely obtain. For a conventional mortgage (one not backed by a government program), most borrowers will need a minimum credit score of 620.
• The amount of your down payment plays a role as well. Making a larger down payment can result in a lower interest rate because borrowers who have more equity in their newly purchased property are perceived as a lower default risk by the lender.
• Your debt-to-income (DTI) ratio is also important. Lenders will look at your income in relation to your monthly debts. In general, mortgage lenders like to see a DTI ratio of no more than 36%, though that is not necessarily the maximum.
Discover how your debt level may impact your mortgage.
Try SoFi’s debt-to-income calculator to calculate your DTI number.
Discover how your debt level may impact your mortgage.
Try SoFi’s debt-to-income calculator to calculate your DTI number.
How Interest Rates Affect Home Affordability
Mortgage rates are a big deal. Let’s say you’re looking at a $400,000 loan. At a 6.50% interest rate, you’d be paying $2,528 each month, and your total interest paid would be just over $510,000. But if that rate jumps to 7.00%, your monthly payment goes up to $2,661 and your total interest paid hits $558,000. Over 30 years, that’s about $48,000 in interest payments you’d be saving with the lower rate. That’s why it’s so important to get the best mortgage rate you can.
The term of your mortgage and the rate are intertwined. As you can see from the examples below — again for a $400,000 loan — a shorter term means a higher monthly payment but less interest paid overall.
The Windy City has a lot to offer, but from a financial standpoint, living here isn’t exactly a breeze. At 42% above the average cost of living in the U.S., Chicago is unlikely to be found on any lists of the best affordable places in the U.S. Food, housing, and health care costs are all noticeably higher here.
The median home sale price in Chicago is $363,000, Redfin reports. According to the Massachusetts Institute of Technology’s Living Wage Calculator, an annual living wage before taxes for a single person with no children in Chicago would be $51,752. A family of four with two working adults would need almost $122,000. When examining mortgage rates in Chicago, it’s also important to take the cost of living into account.
Should You Wait for Interest Rates to Fall?
It’s a common question, especially for those stepping into the Chicago real estate market for the first time. Whether it’s a smart move to wait for rates to drop depends as much on your personal situation as on the market as a whole. Projections from Fannie Mae suggest that the average U.S. mortgage rate will be around 6.30% by year end, with relatively little movement in 2026. Given that little change is anticipated, whether it’s time to buy might depend more on whether you need a house. Is your rental lease ending? Is your family growing? Do you want to live in a certain school district in the coming year? If so, make your move, assuming you can afford to purchase a home, and find the best mortgage rate available. If rates do take a dip in the future, you can always explore a mortgage refinance.
Chicago Mortgage Rate Trends
Historical U.S. Mortgage Rates
When you’re seeking a mortgage in Chicago, it helps to have perspective on the history of mortgage rates in the area. Average mortgage rates have risen since hitting a historic low in 2021, but they are still well below the high points of previous decades.
To gain perspective on what “high” and “low” rates have looked like over the last half-century, consider the graph below. The chart shows how Chicago’s average rate has compared to the national average in recent decades. (The Federal Housing Finance Agency stopped compiling this data after 2018.)
Year
Chicago Rate
U.S. Rate
2000
7.74
8.14
2001
6.95
7.03
2002
6.33
6.62
2003
5.49
5.83
2004
5.57
5.95
2005
5.77
6.00
2006
6.58
6.60
2007
6.58
6.44
2008
6.07
6.09
2009
5.22
5.06
2010
4.95
4.84
2011
4.90
4.66
2012
3.67
3.74
2013
3.86
3.92
2014
4.12
4.24
2015
3.86
3.91
2016
3.70
3.72
2017
4.01
4.03
2018
4.61
4.57
Source: Federal House Finance Agency
Types of Mortgages Available in Chicago, Illinois
Which type of loan you opt for can have an impact on the rate you’ll be offered and whether that rate changes over the life of the loan. These are some of the more common types of loans:
Fixed-Rate Mortgage
Fixed-rate mortgages are the bedrock of home financing. They offer the security of knowing your interest rate and monthly payment amount won’t change over the life of the loan, which could be anywhere from 10 to 40 years. If you value predictability and want to protect yourself against the risk of rising mortgage rates, a fixed-rate mortgage may be the right choice for you.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) typically offer a lower introductory rate than fixed-rate loans, and that rate will hold steady for 5 to 7 years. But after that, the rate on your mortgage will adjust up or down depending on market factors. Homeowners who think they might sell before the introductory period ends should consider an ARM. Just be sure to weigh the potential for rate increases and how they might impact your monthly payments down the line.
FHA Loan
Backed by the Federal Housing Administration (FHA), these loans are known for their more forgiving eligibility criteria compared to conventional loans. A credit score of 580 is the threshold for a minimum 3.5% down payment, and this opens doors for a wider range of homebuyers. Those with credit scores of 500 to 580 can also get an FHA home loan, albeit with a 10% down payment. The flexible underwriting guidelines are a boon, especially if you’re buying your first home.
VA Loan
VA loans make purchasing a home budget-friendly for eligible active-duty military members, veterans, reservists, National Guard members, and surviving spouses. One of the most significant advantages of a VA loan is the potential to secure a mortgage without a down payment. Moreover, VA loans often feature lower interest rates than loans in the general marketplace.
Jumbo Loan
In most areas, and throughout Illinois, conventional mortgage loans have a 2025 cap of $806,500 for a single-family home. Jumbo loans are for borrowers whose needs exceed this limit. They often come with stricter qualification requirements for approval, including a higher credit score and a larger down payment. However, they can be a good option for those looking to purchase more expensive homes in Chicago.
Current mortgage rates by state.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
How to Get Your Best Possible Rate in Chicago
To get the best mortgage rates in Chicago, you’ll want to focus on your credit score. The higher it is, the lower the interest rate you’re likely to get. Check your credit report for inaccuracies; request a correction if you find anything wrong. And pay your monthly bills on time, of course. You can also work on paying down debts, which will lower your debt-to-income ratio (DTI) to 36% or less to make yourself a more attractive borrower.
A larger down payment can also help you get a better rate, so consider how much you can afford without compromising your emergency fund. Going through a lender’s mortgage preapproval process can help you see exactly how much a lender feels you can afford. And having that preapproval letter when you’re house-hunting will show sellers that you’re a serious buyer. Finally, you’ll also want to consider all the different type of mortgage loans and the mortgage rates being offered in Chicago.
Helpful Tools & Calculators
Online calculators are a house-hunter’s best friend. An affordability calculator can help you set your initial budget for your home search. A mortgage payment calculator can allow you to see how different rates and loan terms can affect your monthly payments and total interest paid. These are some useful calculators you’ll want to keep at hand during your search.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
How to Evaluate Loan Offers in Chicago
Given that even half a percentage point can make a significant difference in the cost of your home loan, it’s important to carefully weigh offers from multiple lenders before you make a decision about your mortgage. Don’t just look at interest rates; be sure to consider the annual percentage rate (APR), which encompasses fees, closing costs, and mortgage points. Once you’ve found an offer that suits you, and if you’re concerned about potential rate hikes, you can pay a fee to the lender to lock in your rate for up to 90 days.
Chicago Mortgage Resources
Illinois offers several resources and programs tailored to assist homebuyers, particularly those stepping into the market for the first time or those with limited financial means. The Illinois Housing Development Authority (IHDA) spearheads several initiatives, such as the IHDA Access Forgivable, which pairs a 30-year fixed-rate mortgage with a forgivable second loan of up to 4% of the home’s price. The Chicago Housing Authority also offers a down payment assistance programs that provides eligible buyers with up to $20,000.
Closing Costs in Chicago
In Chicago, you’re looking at 2% to 5% of your loan value for closing costs. Property value and location play a significant role in where you will fall on the cost spectrum. Loan origination fees, property appraisal costs, and title insurance policies all factor into your costs. It’s vital to include closing costs in your financial game plan when purchasing a new place.
The Takeaway
Chicago’s mortgage landscape offers a diverse range of options for prospective homebuyers. By staying well-informed about current mortgage rates in Chicago and thoroughly exploring available assistance programs, homebuyers can make strategic decisions. Whether you’re a first-time buyer or a seasoned homeowner looking to refinance, understanding the different types of mortgages and the various factors that influence rates can greatly assist you in securing the best possible loan terms and save money over the long run.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
VA loans are available to eligible active-duty military members, veterans, reservists, and surviving spouses. The first step toward qualifying is to obtain a Certificate of Eligibility from the U.S. Department of Veterans Affairs. After that a lender that offers VA loans can help you obtain a loan, assuming you meet minimum credit score and other financial requirements. Good news: VA loans do not require a down payment.
What’s the scoop on fixed-rate versus adjustable-rate mortgages?
With a fixed-rate mortgage, you’ve got the stability of a consistent interest rate for the life of the loan, which could be anywhere from 10 to 40 years. This means your monthly payments will stay the same as well. Adjustable-rate mortgages (ARMs), on the other hand, tend to start out with a relatively low introductory rate but then the rate can rise or fall according to the market, within certain limits that will be outlined in your loan agreement.
Will mortgage rates in Chicago decrease?
Keeping an eye on economic trends and market conditions is the best way to know what will happen to mortgage rates in Chicago. If the 10-year Treasury Bond rate is falling, mortgage interest rates may fall as well. However, the forecast for interest rates through 2025 is one of relative stability, with the national average rate ending the year at 6.30%.
How do mortgage interest rates work?
Mortgage interest is the cost to borrow money, expressed as a percentage of the loan. Rates depend on each borrower’s finances and economic conditions. Rates can be fixed or variable. When you make a mortgage payment, a portion of the payment goes toward the principal that you owe and a portion of it is interest. To see what amount is going where, a borrower can review the amortization schedule for their loan.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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