Forty-seven housing projects across Illinois and Wisconsin are splitting $62 million in new grants meant to help build, buy, or fix up nearly 1,800 affordable homes, under a funding round that developers say arrives as rents and construction costs keep climbing. The money is set to back everything from new single-family homes on Chicago's vacant lots to a historic Milwaukee hospital conversion for older adults.
The Federal Home Loan Bank of Chicago announced the 2026 Affordable Housing Program General Fund awards, according to GazetteXtra, with the funding expected to enable acquisition, rehabilitation, and new construction of 1,786 affordable housing units. The bank's board of directors also approved an additional $10 million for affordable housing needs across the district, per the same report. This year's total is a jump from 2025, when FHLBank Chicago awarded $52 million for 37 projects expected to support more than 1,600 housing units, according to FHLBank Chicago.
Vacant Chicago Lots Become New Homes
One of the named recipients, Reclaiming Chicago NFP, received a 2026 AHP General Fund grant through member First Eagle Bank to construct 24 additional affordable homes across four Chicago neighborhoods — Back of the Yards, Roseland, North Lawndale, and Washington Park — on vacant, city-owned lots, the GazetteXtra report states. The effort is part of a broader initiative led by United Power for Action and Justice, which brings together civic and religious organizations, including five nonprofit development partners, to expand homeownership opportunities, per the same report. First Eagle Bank also provided a $1 million interest-free loan to advance the Reclaiming Chicago initiative, the report notes.
“First Eagle Bank is proud to support Reclaiming Chicago in transforming vacant lots into affordable homes and creating homeownership opportunities for Chicago families,” said Faruk Daudbasic, according to the report.
Milwaukee Hospital to House Seniors and Residents With Disabilities
In Milwaukee, the Milwaukee Development Corporation received a 2026 AHP General Fund grant to transform a historic former hospital into 124 affordable apartments for adults ages 55 and older, with the project sponsored by Associated Bank, N.A., per the report. The building will include 25 supportive housing units for residents with disabilities, and Jewish Family Services will provide on-site services, the report states.
“The development will provide affordable housing in Milwaukee while preserving neighborhood history,” said Pat O'Brien, according to the report, adding that “the project will help older adults live independently with access to needed services.”
Why the Need Keeps Growing
“Affordable housing remains a pressing need across Illinois and Wisconsin as rising development costs and limited housing supply challenge communities,” said Michael Ericson, per the report. He added that “increased investment in this year's AHP General Fund supports more affordable housing and helps members and community organizations advance critical projects,” according to the same account.
Since the program's 1989 inception through year-end 2025, FHLBank Chicago has allocated more than $630 million in AHP General Fund grants, helping provide housing for more than 85,000 households, the article notes. Applications for the General Fund are submitted annually by housing development organizations, government entities, public housing authorities, and tribally designated organizations through FHLBank Chicago member institutions, which include banks, credit unions, insurance companies, and community development financial institutions, per the same source.
A Program Years in the Making
The 2026 AHP General Fund application round actually closed back on June 12, with awards slated for a late-fall announcement, according to FHLBank Chicago's program page. Under program rules, the maximum subsidy for any single project is capped at $2 million or 75% of total project cost, whichever is less, the same page states. Owner-occupied homes funded through the program must remain affordable for five years, while rental projects carry a 15-year affordability requirement, according to FHLBank Chicago's guidelines.
The scale of this year's Illinois and Wisconsin round fits into a much larger national trend. The 11 Federal Home Loan Banks together awarded $875.5 million through the Affordable Housing Program in 2025, supporting 42,132 rental and owner-occupied homes nationwide, according to Novogradac. General Fund awards made up $623.3 million of that systemwide total, with Homeownership Funds contributing $247.1 million and Targeted Funds adding $5.1 million, Novogradac reports. Rental housing accounted for 85% of homes supported through the General Fund in 2025, down slightly from 90% the year before, per the same analysis.
FHLBank Chicago describes itself as a self-capitalizing cooperative and a regional bank within the Federal Home Loan Bank system, owned by its Illinois and Wisconsin members. The Federal Home Loan Banks themselves are government-sponsored enterprises created by Congress to ensure member financial institutions have access to low-cost funding, according to the bank's own description relayed in the GazetteXtra report. A separate FHLBank Chicago update from October described how a $2 million AHP grant helped deliver 40 new homes at Trailview Cottages, a workforce and affordable housing community in Hayward, Wisconsin — a project now fully leased, with 208 households still on its waiting list, underscoring the kind of long-term demand these grant rounds are meant to address.
