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Compare mortgage rates in Illinois.
Key Points
• Mortgage rates in Illinois have ranged from 7.79% in 2000 to a low of 3.70% in 2012 and 2016 — slightly below the average U.S. mortgage rate.
• Mortgage rates are influenced by various factors including the federal funds rate, inflation, unemployment rates, and global market conditions.
• Higher interest rates lead to increased monthly mortgage payments, making it more challenging for individuals to purchase homes within their budget.
• Illinois offers a diverse range of mortgage options including fixed-rate, adjustable-rate (ARMs), FHA, VA, and USDA loans.
• Seasonal trends show that mortgage rates in Illinois tend to rise in the spring and summer months and decline in the fall and winter.
Introduction to Mortgage Interest Rates
Finding the best mortgage rate is crucial for saving money over the life of a loan. Mortgage interest rates are calculated using a complex combination of factors, which can be divided into two categories: the state of the economy and the borrower’s financial status.
Whether or not you’re buying your first home, understanding these factors can help you make informed decisions about the best time to apply for a mortgage and the type of mortgage that best suits your financial situation.
This comprehensive guide provides an overview of mortgage rates in Illinois, including historical trends, economic factors, consumer considerations, and popular mortgage types.
Where Mortgage Rates Come From
The Federal Reserve, aka the Fed, sets the short-term interest rates that banks use. Although home loan rates aren’t directly tied to Fed rates, they follow the same economic trends.
When the Fed’s interest rate is high, chances are mortgage rates will be too. And when the Fed cuts its rate, mortgage rates will likely follow suit.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability, with even small interest rate increases potentially putting homeownership out of reach for middle-income Americans.
For instance, a 1% increase in interest rate on a $300,000 loan can add almost $200 to the monthly mortgage payment, making a significant difference in affordability. Over the course of 30 years, however, that $200 difference adds up to almost $70,000 in additional interest paid!
Therefore, it’s crucial for homebuyers to carefully consider current mortgage rates and their impact on affordability when making homeownership decisions.
Should Homebuyers Wait for Interest Rates to Drop?
Many first-time homebuyers wonder if they should buy now or wait for interest rates to come down by a certain amount. While it’s possible that rates will continue to decrease into 2025, there are several factors to consider before delaying a home purchase.
First, it’s important to remember that mortgage rates are cyclical and fluctuate over time. Trying to “time the market” is challenging even for the experts, and waiting too long could mean missing out on a suitable property or facing even higher rates — and higher home prices — in the future.
Additionally, homeowners can always help themselves to a mortgage refinance after rates come down, lowering their interest rate and their monthly payment. Therefore, buying a home when it’s the right time for you financially may be a better decision than waiting for an uncertain drop in interest rates.
Historical Mortgage Rate Trends
Understanding historical mortgage rates can provide valuable insights into where rates are headed. While rates have risen in recent years, they remain below historical highs. In fact, they are currently around the 50-year average.
This suggests that current mortgage rates are relatively favorable compared to long-term trends. However, it’s important to note that rates can fluctuate and there are no guarantees about future trends.
Historical Illinois Mortgage Rates
Illinois mortgage rates have ranged in recent years from a high of 7.79% in 2000 to a low of 3.70% in 2012 and 2016. This is slightly below the average U.S. mortgage rate.
| Year | Illinois Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.79 | 8.14 |
| 2001 | 6.97 | 7.03 |
| 2002 | 6.36 | 6.62 |
| 2003 | 5.54 | 5.83 |
| 2004 | 5.56 | 5.95 |
| 2005 | 5.78 | 6.00 |
| 2006 | 6.54 | 6.60 |
| 2007 | 6.56 | 6.44 |
| 2008 | 6.09 | 6.09 |
| 2009 | 5.20 | 5.06 |
| 2010 | 4.97 | 4.84 |
| 2011 | 4.69 | 4.66 |
| 2012 | 3.70 | 3.74 |
| 2013 | 3.87 | 3.92 |
| 2014 | 4.13 | 4.24 |
| 2015 | 3.86 | 3.91 |
| 2016 | 3.70 | 3.72 |
| 2017 | 4.03 | 4.03 |
| 2018 | 4.66 | 4.57 |
Historical U.S. Mortgage Rates
For context, the average 30-year fixed mortgage rate in the U.S. has fluctuated from incredible lows in 2012 to a high of 18.63% in 1981. The current rate of around 6.00% falls within this historical range, indicating that rates are still relatively moderate compared to the past.
Factors Affecting Mortgage Rates in Illinois
Many factors influence mortgage rates in Illinois and nationwide. Some of these are economic, while others are within the homebuyer’s control.
Understanding these factors can help homebuyers make informed decisions about their mortgage options.
Economic Factors
Economic factors that influence mortgage rates in Illinois include the federal funds rate, inflation, and unemployment.
• The Fed: The federal funds rate is the interest rate that banks charge each other for overnight loans, and banks use it as a reference point when setting their own lending rates. When the federal funds rate is cut, mortgage rates tend to dip.
• Inflation: Inflation is the rate at which the cost of living, or the general level of prices for goods and services, increases over time. When inflation rises, the value of money decreases, making it more expensive for lenders to lend money. As a result, lenders may increase interest rates to compensate for the loss in purchasing power.
• Unemployment rate: The unemployment rate measures the percentage of the labor force that is unemployed. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, not surprisingly, mortgage interest rates.
Consumer Factors
Consumer factors that influence mortgage rates in Illinois include credit score, down payment, income and assets, and the type of mortgage loan.
• Credit score: A credit score is a representation of a person’s creditworthiness. It is based on factors such as payment history, debt-to-income ratio, and length of credit history. A higher credit score indicates a lower risk of default, which makes lenders more likely to offer lower interest rates.
• Down payment: A down payment is the amount of money paid upfront for a property purchase. Increasing the down payment reduces the amount of money that needs to be borrowed, which lowers the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.
• Income and assets: Lenders consider a steady income and sufficient assets as indicators of a borrower’s ability to repay the loan. A steady income demonstrates the borrower’s earning potential, while assets provide a financial cushion in case of unexpected events. Borrowers with higher incomes and more assets are generally considered lower-risk and may be offered lower interest rates.
• Mortgage type The type of mortgage loan chosen can also impact the interest rate. Adjustable-rate mortgages (ARMs) typically offer lower initial rates than fixed-rate mortgages, but the rate can adjust over time. Government-backed loans, such as VA loans, may have lower rates compared to conventional loans. Additionally, shorter loan terms generally come with lower interest rates than longer terms.
Types of Mortgages Available in Illinois
Various mortgage types — including fixed-rate, adjustable-rate, FHA, VA, and USDA loans — are available to meet the needs of different homebuyers.
Each type of mortgage has its own unique characteristics, advantages, and disadvantages. It’s important for homebuyers to carefully consider their individual circumstances and financial goals when choosing a mortgage type.
Conventional loans are not backed by the government and are offered by banks and credit unions. They can be fixed-rate or adjustable-rate. Conventional loans may have stricter credit and income requirements compared to government-backed loans.
Fixed-Rate mortgages
Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant.
Fixed-rate mortgages provide stability and predictability in monthly payments, making them a good option for borrowers who prefer a consistent housing expense.
Fixed-rate mortgages are typically available in terms of 10, 15, 20, or 30 years. The loan term affects the monthly payment amount and the total interest paid over the life of the loan.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) initially offer a lower rate than fixed-rate loans. However, the interest rate adjusts periodically, typically after an initial fixed-rate period of three to ten years
ARMs can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends or who are comfortable with the potential for interest rate fluctuations.
However, it’s important to carefully consider the potential risks and understand how interest rate adjustments could impact monthly payments before choosing an ARM.
FHA Loan
FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible to borrowers with lower credit scores and/or smaller down payments.
FHA loans have more flexible credit and income requirements compared to conventional loans, making them a good option for first-time homebuyers and those with less-than-perfect credit.
VA Loan
VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members. They offer competitive interest rates and do not require a down payment.
Even though the VA sets the basic eligibility requirements and guarantees the loan, borrowers actually apply to private lenders for these loans, after first obtaining a certificate of eligibility from the VA.
USDA Loan
USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. They offer competitive interest rates and do not require a down payment. USDA loans are backed by the U.S. Department of Agriculture, which reduces the risk to lenders and allows them to offer more favorable terms to borrowers.
Jumbo Loans
Jumbo loans are conventional loans that exceed the conforming loan limits set by Fannie Mae and Freddie Mac. They are typically used to finance high-value properties.
Conforming loan limits vary depending on the location and type of property. For 2024, the conforming loan limit for a single-family home in Illinois is $766,550. Jumbo loans are required for properties that exceed this limit.
Popular Places to Get a Mortgage in Illinois
Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable.
Some popular places to get a mortgage in Illinois include Chicago, Aurora, Naperville, Joliet, and Springfield. These areas offer a range of housing options and competitive mortgage rates.
When considering different locations, it’s important to factor in the cost of living. This refers to the amount of money needed to cover basic expenses such as housing, food, transportation, and healthcare. The Cost of Living Index (COLI) provides a comparison of the cost of living in different areas relative to the average cost of living in the U.S.
Least Expensive Locations
Some of the least expensive places to live in Illinois include:
• Cairo: COLI 74.4
• Harrisburg: COLI 71.8
• Mount Vernon: COLI 74.2
• Olney: COLI 73.2
• Robinson: COLI 72
Recommended:Best Affordable Places to Live in the U.S.
Most Expensive Locations
The most expensive places to live in Illinois all have a COLI of 105.7. To help distinguish these areas, we checked out the average home price in each and discovered some big differences:
• Chicago: $299,859
• Oak Park: $240,565
• River Forest: $664,421
• Wilmette: $845,246
• Winnetka: $1,559,495
Recommended: What Are The Average Monthly Expenses for One Person?
Tips for Securing a Competitive Mortgage Rate in Illinois
Securing a competitive mortgage rate can save you many thousands of dollars over the life of your loan. Here are some tips to help you get the best possible rate:
Compare Interest Rates and Fees
Take the time to compare interest rates and fees from multiple lenders. But don’t just focus on the interest rate – consider the total cost of the loan, including any fees and closing costs. Some lenders may offer a lower interest rate but charge higher fees, so it’s important to compare the overall package.
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. You can even lock in your rate for a certain period of time, typically 30 to 90 days. This can give you peace of mind knowing that your interest rate won’t increase before you close on the loan.
Recommended: What to Know About the Mortgage Preapproval Process
Illinois Mortgage Resources
The Illinois Housing Development Authority (IHDA) offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. As with any mortgage, participants may have to meet requirements regarding income, credit scores, and debt-to-income ratio to qualify.
These resources can provide information, counseling, and financial assistance to help make home ownership more affordable in the Prairie State.
First-Time Homebuyer Programs
Illinois offers several programs to help anyone who qualifies as a first-time homebuyer overcome the challenges of saving for a down payment and qualifying for a mortgage.
• The IHDA Access Forgivable program offers qualifying buyers a 30-year, fixed-rate mortgage along with a forgivable second loan they can put toward their down payment, closing costs, or both.
• The IHDA Access Deferred offers a 30-year, fixed-rate mortgage, with a second interest-free loan that is referred for the life of the mortgage.
• The IHDA Access Repayable offers the same first mortgage with an interest-free second loan that can be used for a down payment and closing costs; the second loan is repaid in monthly installments over a 10-year period.
For these and other programs, check our our Illinois First-Time Homebuyer Guide.
Down Payment Assistance
Down payment assistance programs can provide financial assistance to help homebuyers make a down payment on a home. These programs may offer grants, loans, and other forms of assistance.
The Federal Home Loan Bank of Chicago offers two down payment and closing cost programs: Downpayment Plus provides eligible bank customers with a matching grant that is forgiven on a monthly basis over a 5-year period.
Downpayment Plus Advantage is similar, but the grants are limited to homebuyers who are participating in a homeownership program offered by a nonprofit organization that provides mortgage financing directly to the homebuyer. To apply, contact a nonprofit, such as Habitat for Humanity, that originates first mortgages.
Tools & Calculators
SoFi online tools and calculators are available to help homebuyers estimate their monthly mortgage payments, compare interest rates, and determine how much they can afford to borrow.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
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.
Refinancing Options in Illinois
Refinancing a mortgage can be a good way to lower your interest rate, reduce your monthly payments, or cash out some of your home equity.
• The FHA Streamline refinance is a simplified refinancing option available to FHA-insured homeowners. It allows you to refinance into current mortgage rates with minimal hassle and paperwork.
• The Interest-Rate Reduction Refinance Loan (IRRRL) is a refinancing option available to VA loan borrowers. It allows you to reduce their monthly payments by adjusting the annual percentage rate (APR) on your existing VA loan.
Closing Costs, Taxes, and Fees in Illinois
Buyers in Illinois can expect to pay between 2% and 5% of the home’s purchase price in closing costs. For the average home value in Illinois of $267,365, that comes to around $5,300 to $13,400.
Closing costs include various fees and charges associated with buying a home, such as appraisal fees, title insurance, loan origination fees, and transfer taxes.
The amount of closing costs vary depending on the value of the property and the location. It’s important to factor closing costs into your budget when buying a home.
The Takeaway
Illinois’s mortgage landscape offers a range of options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in Illinois.
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.FAQ
What is a mortgage rate?
A mortgage rate is the interest rate charged on a mortgage loan. It determines the amount of interest paid on the borrowed amount over the life of the loan.
Will mortgage rates drop in Illinois?
Predicting future mortgage rate movements is challenging. While rates may decrease in the future, there is no guarantee of when or by how much. Homebuyers should make decisions based on their current financial situation and housing needs rather than solely relying on potential future rate changes.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates is subjective and can vary over time. Mortgage rates are influenced by many economic factors and market conditions, and they fluctuate over time. It is difficult to predict when or if rates will return to a specific level.
Will Illinois home prices ever drop?
Housing prices are influenced by numerous factors, including supply and demand, economic conditions, and local market dynamics. Predicting future home price movements is challenging and uncertain. While prices may fluctuate over time, there is no guarantee that they will drop significantly or remain stable.
Is it a good time to buy a house in Illinois?
The decision of whether it is a good time to buy a house in Illinois depends on individual circumstances and preferences. Factors such as financial readiness, housing needs, and long-term plans should be considered. Market conditions, including mortgage rates and home prices, can also influence the decision-making process.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including economic conditions, Federal Reserve policies, and market forces. Lenders consider many elements when setting mortgage rates, including the prevailing interest rate environment and the level of risk associated with the 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.
†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.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. 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.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process