HELOC Rates in Chicago, IL: Your 2026 Guide to Home Equity Lines of Credit

Chicago homeowners are sitting on a lot of equity. After years of steady appreciation across the Chicagoland metro—median home values now hover around $310,000 to $330,000 in the city proper and significantly higher in suburbs like Naperville, Hinsdale, and Lake Forest—tapping that equity through a [home equity line of credit](/blog/best-heloc-lenders-2026) (HELOC) is one of the most cost-effective borrowing options available.

But HELOC rates vary widely by lender, and Illinois has specific rules that affect how these products work. This guide breaks down what Chicago homeowners need to know in 2026.

Current HELOC Rates in Chicago

As of early February 2026, the national average HELOC rate sits at 7.32%, according to Bankrate's weekly survey. In the Chicago metro area, rates from local and national lenders typically range from 6.50% to 9.00% depending on your credit score, loan-to-value (LTV) ratio, and the lender you choose.

Here's a general breakdown of what Chicago borrowers can expect:

• Excellent credit (740+): 6.50% – 7.25% APR
• Good credit (700–739): 7.25% – 8.00% APR
• Fair credit (660–699): 8.00% – 9.50% APR

These rates are variable and tied to the prime rate, which currently stands at 7.50%. Most lenders set HELOC rates as prime plus or minus a margin based on your creditworthiness. After the Federal Reserve's three rate cuts in 2025 and a pause at its January 2026 meeting, rates have settled near their lowest point in over three years.

Keep in mind that some lenders offer introductory rates—sometimes as low as 4.99%—for the first 6 to 12 months. These teaser rates revert to the standard variable rate afterward, so always check what the post-intro rate will be.

Best HELOC Lenders in the Chicago Area

Chicago homeowners have a strong mix of national banks, regional players, and local credit unions to choose from. Here are some of the top options:

BMO (formerly BMO Harris Bank)

BMO is headquartered in Chicago and has one of the largest branch networks in the metro. They offer HELOCs up to $1 million with no application fees and no closing costs on many products. Their rates tend to be competitive for borrowers with strong credit profiles. BMO also allows you to convert portions of your HELOC balance to a fixed rate, which is a nice hedge against rising rates.

Alliant Credit Union

Based in Chicago, Alliant is one of the largest credit unions in the country and consistently offers some of the [lowest HELOC rates](/blog/best-heloc-rates-2026) in Illinois. Their current rates start around 6.75% APR for well-qualified borrowers, with no annual fees and no closing costs on lines up to $250,000. Membership is open to anyone who makes a $5 donation to a partner charity.

Wintrust Financial

Wintrust operates over a dozen community bank brands across Chicagoland, including Old Second National Bank and Inland Bank. They're known for flexible underwriting and a willingness to work with borrowers who have less-than-perfect credit. Rates are slightly higher than Alliant or BMO, but the personal service and local decision-making can be worth it.

Chase

Chase has a massive presence in Chicago and offers HELOCs with relationship discounts for existing checking and investment customers. If you have $250,000+ in combined deposits and investments, Chase can knock 0.25% to 0.50% off your rate. Their digital application process is also one of the smoothest in the industry.

Navy Federal Credit Union

If you or a family member has any military affiliation, Navy Federal is hard to beat. Their HELOC rates are often 0.50% to 1.00% below the market average, and they offer 100% LTV HELOCs—meaning you may not need any equity cushion at all.

Chicago Housing Market and Home Equity Conditions

Understanding the local housing market is key to knowing how much equity you can access.

Median home values in Chicago have grown steadily over the past several years. As of early 2026:

• City of Chicago: ~$320,000 (up roughly 5% year-over-year)
• Cook County overall: ~$340,000
• Suburban collar counties (DuPage, Lake, Will, Kane): $350,000–$475,000 depending on the area

This appreciation has been good news for homeowners looking to borrow against their equity. If you bought a home in Chicago in 2019 for $280,000, it's likely worth $310,000–$340,000 today, giving you $30,000–$60,000 in additional equity even before accounting for mortgage principal paydown.

Most lenders allow you to borrow up to 80% to 85% of your home's appraised value minus your outstanding mortgage balance. Some go up to 90% for strong borrowers.

Example: If your Chicago home is worth $350,000 and you owe $200,000 on your mortgage, at 80% LTV you could access up to $80,000 through a HELOC ($350,000 × 0.80 = $280,000 − $200,000 = $80,000).

The Chicago market is currently balanced—neither a strong seller's nor buyer's market—which means home values should hold relatively steady through 2026. That stability gives lenders confidence in approving HELOCs at favorable terms.

Illinois State Regulations for HELOCs

Illinois has several consumer protection laws that affect home equity lending:

Right of Rescission

Under both federal law (Regulation Z) and Illinois state law, you have three business days after closing a HELOC to cancel the agreement without penalty. This applies to any loan secured by your primary residence.

Illinois Interest Act

Illinois does not have a specific usury cap on HELOC rates for most institutional lenders (banks, credit unions, and licensed lenders are generally exempt from the state's general usury limit). However, lenders must clearly disclose all rate terms, margins, caps, and floors in writing before closing.

Property Tax Considerations

Illinois has some of the highest property taxes in the nation. Cook County's average effective property tax rate hovers around 2.1%, and some south suburban areas exceed 3%. While this doesn't directly affect your HELOC rate, high property taxes increase your total housing costs. Lenders factor this into your [debt-to-income ratio](/blog/dti-ratio-explained) when underwriting your [HELOC application](/blog/heloc-application-process-step-by-step).

Recording and Title Requirements

HELOCs in Illinois require a mortgage to be recorded with the county recorder's office. This means there will be recording fees (typically $50–$100 in Cook County) and a title search. Some lenders cover these costs; others pass them to the borrower.

Tax Implications of a HELOC in Chicago

The tax rules for HELOC interest deductions changed significantly with the Tax Cuts and Jobs Act (TCJA) of 2017, and those rules remain in effect through at least 2025 (with Congress currently debating extensions).

Here's the current situation:

• HELOC interest is deductible if—and only if—you use the funds to "buy, build, or substantially improve" the home that secures the loan. So using your HELOC to renovate your kitchen in Lincoln Park? Deductible. Using it to pay off [credit card debt](/blog/heloc-vs-credit-card) or fund a vacation? Not deductible.
• The combined limit for mortgage and HELOC interest deductions is $750,000 in total mortgage debt ($375,000 if married filing separately).
• You'll need to itemize deductions on your federal return to benefit. Given Illinois's high property taxes and state income tax (a flat 4.95%), many Chicago homeowners already exceed the standard deduction.

Illinois state income tax is a flat rate and doesn't offer a separate deduction for mortgage interest, but since it conforms to federal adjusted gross income as a starting point, the federal deduction indirectly reduces your state tax liability.

Keep records of how you spend HELOC funds. If the IRS questions your deduction, you'll need to show the money went toward qualifying home improvements.

How to Use a HELOC Wisely in Chicago

Popular uses among Chicago homeowners include:

• Home renovations: Kitchen and bathroom remodels remain the top use. In Chicago's older housing stock (many homes date to the early 1900s), updating electrical, plumbing, and insulation can significantly boost value while making the home more livable.
• [Property tax escrow](/blog/mortgage-escrow-explained): Some homeowners draw on a HELOC to cover a large property tax bill and then repay it over a few months, avoiding the cash flow crunch of Cook County's biannual billing.
• Investment property down payments: Chicago's strong rental market—especially in neighborhoods like Logan Square, Pilsen, and Bronzeville—makes buying a second property appealing. A HELOC on your primary residence can fund the down payment.
• Debt consolidation: If you're carrying high-interest credit card debt, a HELOC at 7% beats a credit card at 22%. Just be cautious—you're converting unsecured debt to debt secured by your home.
• Emergency fund: A HELOC can serve as a backup line of credit. You don't pay interest until you draw on it, so having one in place costs nothing if unused.

Frequently Asked Questions

How long does it take to get a HELOC in Chicago?

Most lenders take 2 to 6 weeks from application to closing. Credit unions like Alliant tend to be faster (2–3 weeks), while larger banks like Chase may take 4–6 weeks due to higher volume. You can speed things up by having your documents ready: recent pay stubs, two years of tax returns, a current mortgage statement, and homeowner's insurance info.

Can I get a HELOC on a condo in Chicago?

Yes, but there are extra requirements. Lenders will review the condo association's financial health, reserve fund balance, owner-occupancy ratio, and insurance coverage. Some lenders won't lend on condos in buildings with fewer than 5 units or where more than 25% of units are investor-owned. High-rise condos in the Loop or along Lake Shore Drive are generally fine if the building is well-managed.

Are there closing costs on a Chicago HELOC?

It depends on the lender. Many credit unions and some banks (including BMO and Alliant) waive closing costs entirely. Others charge $200–$500 for an appraisal, title search, and recording fees. Always ask upfront and compare the total cost of the HELOC, not just the rate.

What happens to my HELOC if Chicago home values drop?

If your home's value decreases, your lender can reduce your credit limit or freeze your HELOC entirely. This happened to many borrowers during the 2008 crisis. While a significant downturn is unlikely in 2026's relatively stable market, it's a risk to understand. Avoid maxing out your line—keeping a buffer protects you.

Can I get a [HELOC with bad credit](/blog/heloc-credit-score-requirements) in Chicago?

It's harder but not impossible. Some local lenders like Wintrust and certain community banks will work with borrowers who have credit scores in the 620–659 range, though you'll pay a higher rate (9%–11%) and may be limited to a lower LTV. If your credit is below 620, consider a home equity loan (fixed-rate, lump sum) instead, as those are sometimes available with more flexible underwriting.

The Bottom Line

Chicago is a strong market for HELOCs in 2026. Home values have been climbing, rates are near multi-year lows, and the city's deep lender competition gives borrowers real bargaining power. Shop at least 3–4 lenders, compare the APR (not just the intro rate), and make sure you understand the variable-rate risk before signing.

If you're a Chicago homeowner with meaningful equity, a HELOC can be one of the cheapest and most flexible ways to access cash. Just borrow what you need, have a repayment plan, and keep an eye on where rates head after the Fed's next meeting in March.

Related Articles

• [Using a HELOC for an [Investment Property Down Payment](/blog/investment-property-down-payment): Smart Strategy or Risky Move?](/blog/heloc-for-investment-property-down-payment)
• Home Equity Explained: What It Is and How to Build It
• Investment Property Down Payment: Your Real Options in 2026