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The following article by Katie Naftzger, Senior Vice President and Community Investment Officer , originally appeared in Crain's Chicago Business on October 26, 2026.
FHLBank Chicago’s Katie Naftzger shares how the institution has expanded their Mortgage Partnership Finance® (MPF®) Habitat for Humanity® Program in response to rising costs
Housing affordability remains a major challenge across Chicagoland. What role can FHLBank Chicago play in increasing supply to meet demand?
Housing affordability is, at its core, a supply problem. Across Illinois and Wisconsin, we’re contending with an aging housing stock, low levels of new construction and limited access to rehabilitation financing, which new Urban Institute research on our district confirms. The findings reinforce what members have told us about local housing challenges. Our role is to help member financial institutions put more capital to work in support of housing.
Through our Affordable Housing Program, we provide gap financing that moves developments forward, often projects that might not otherwise be built. This year we made $51 million available through AHP, and since 1989 the program has supported more than 85,000 housing units.
Most recently, AHP funding helped convert the former Earle School in Chicago’s Englewood neighborhood into 50 affordable apartments. We also help expand access to homeownership through our Downpayment Plus® programs, which provide forgivable grants for down payment and closing costs through participating member institutions. Supply also depends on people.
Through our Community First® Developer Program, we’re helping organizations bring emerging professionals into the affordable housing development industry, strengthening the pipeline of developers ready to build. No single organization can solve this alone, which is why we work through our members and their local partners.
FHLBank Chicago recently expanded the Mortgage Partnership Finance® (MPF®) Habitat for Humanity® Program. How does that initiative help address barriers to homeownership, and what impact could programs like this have for Chicago families and neighborhoods?
For many working families, the monthly mortgage payment is what keeps homeownership out of reach. The MPF Habitat for Humanity Program helps close that gap. Through the program, participating member financial institutions can deliver mortgages for Habitat homebuyers into our secondary market program, MPF, at rates approximately 2.5 percentage points below market, with FHLBank Chicago funding the discount. Member interest has been strong, so this summer we increased the program subsidy to $3 million and doubled the per-member limit to $2 million.
This unique program supports both affordable mortgage lending and expansion of the local housing supply, as each transaction facilitates delivery of a new Habitat housing unit into the market. What’s more, FHLBank Chicago’s tools can work together in these transactions to amplify impact. When eligibility requirements are met, participating members can combine an MPF-Habitat mortgage with a FHLBank Chicago Downpayment Plus® grant of up to $10,000 for down payment and closing costs, and use our Community Advance for discounted funding on their affordable housing lending.
For a Chicago family, that combination can make homeownership attainable. For communities, expanding access to sustainable homeownership can strengthen neighborhood stability and create opportunities for families to build long-term wealth.
Beyond housing, how is FHLBank Chicago helping its member institutions finance small businesses and broader community development projects that support the local economy?
Strong local economies depend on access to capital, and local financial institutions are often the ones delivering it. Our Community Advance provides discounted funding that members can use for affordable housing, small business and economic development lending. By lowering the cost of eligible funding, Community Advances can help members improve the economics of loans and investments to support local priorities.
In 2025, FHLBank Chicago provided $33 million in subsidies supporting Community Advances and other loans. Small businesses are a critical part of that story because they create jobs, provide services and contribute to stronger local economies. Our members know their markets better than anyone. Our role is to provide flexible, affordable tools that help them respond to local needs and keep capital working close to home.
What are the recent updates to the Community Advance program and how was this a response to changing market needs?
Higher borrowing costs have made many community investment projects harder to finance, and we have heard that directly from our members. They wanted greater capacity to use our Community Advance and deeper incentives to do so. We responded with two changes this year. In January, we doubled the per-member outstanding Community Advances limit to $500 million. In August, we doubled the annual interest-rate subsidy limit from $200,000 to $400,000 per member. We also strengthened the program’s minimum discount on eligible activity to 100 basis points, or 1 percentage point, while retaining the maximum discount of 200 basis points, or 2 percentage points, for member lending aligned with key priorities.
Together, these changes give members greater capacity to use our Community Advances and enhance the value of the discounted funding available for eligible loans. That can be meaningful when the viability of a housing, small business or economic development project depends in part on its cost of funds. We continually evaluate our programs, and member feedback helps us keep them relevant as market conditions change.
About the author
Katie Naftzger is Senior Vice President and Community Investment Officer at FHLBank Chicago, where she provides strategic leadership for the Bank’s community investment programs serving Illinois and Wisconsin. With more than 20 years of experience in affordable housing and community development, she works with member financial institutions to expand housing opportunities and strengthen local economies.