Illinois DSCR Loans: Requirements, Chicago Two-Flats, and Cook County Taxes

These are the pieces every Illinois DSCR file has to clear. Each program sets its own thresholds, so I match your property to the program instead of the other way around.

• The right kind of property. A residential investment or rental property with 1 to 9 units that you and your family will not live in. Mobile and manufactured homes are not eligible.
• Documented rent. A signed lease, or the appraiser's market rent schedule. On a two-flat or three-flat I look at each unit's rent separately. On a 5 to 9 unit building I look at the full rent roll and the leases behind it.
• Rent that carries the payment. The rent is compared with the complete payment, including the real Cook County or downstate tax figure and a landlord insurance quote, not an owner occupied estimate.
• Credit, reserves, and cash to close. Reviewed program by program. I tell you where you land once I see the property and your file, not before.
• Appraisal and title. A full appraisal with a rent schedule, plus clear title.
• Vesting. Your personal name or an LLC. If you use an LLC, the name on the deed has to match the borrower on the loan.

What you do not need is a stack of tax returns, W2s, or pay stubs as the basis of approval. This is general education, not a loan offer or a commitment to lend.

Yes. On my Licensing page, Illinois shows No under LLC vesting required, so you can close in your personal name or in an LLC. A specific program can still prefer one or the other, and I confirm that on your file before you commit to a structure.

If you want an entity, an Illinois LLC is formed through the Illinois Secretary of State, and the LLC has to be in place before closing so the deed and the loan line up. Some Chicago owners hold title through an Illinois land trust instead. Whether a DSCR program will lend with that vesting is decided program by program, so tell me at the start if your building is held that way.

Already own an Illinois rental in your own name and want to move it into an LLC? That usually means a new deed recorded with the county. Illinois purchases commonly involve an attorney, and that is the right person to ask before you deed a building that has tenants in it.

The brick two-flat and three-flat, with one apartment on each floor, is the classic Chicago rental, and it is exactly the kind of building a DSCR loan is built for. I see the same questions on courtyard buildings and other small apartment buildings with 5 to 9 units, which DSCR also covers. Above 9 units, the deal moves to commercial financing.

City versus suburbs. Inside Chicago, most rentals fall under the Chicago Residential Landlord and Tenant Ordinance. The main exemption is for owner occupied buildings with six or fewer units, and a DSCR building is not owner occupied by definition, so plan your leases and security deposit handling around that ordinance. In suburban Cook County, the Cook County Residential Tenant and Landlord Ordinance has applied since 2021, with a similar owner occupied exemption, and a few suburbs such as Evanston and Mount Prospect keep their own rules. In DuPage, Lake, Will, Kane, and McHenry counties, check the city or village where the property sits.

Short-term rentals in Chicago. Count on long-term rent. Under the City of Chicago's shared housing rules, a short-term rental in a single family home or in a building with 2 to 4 units has to be the host's primary residence, with one active rental at most. An investor-owned two-flat does not meet that test. Buildings with 5 or more units can have a limited number of short-term units without the primary residence rule, but registration, Restricted Residential Zones, and the Prohibited Buildings List still apply, so I underwrite a Chicago file on long-term rent unless the short-term use is clearly allowed.

If you searched for a DSCR lender in Chicago or the best DSCR lenders in Illinois, here is the straight answer: I am a mortgage broker, not a lender. I don't fund the loan myself. I take one application and shop it with wholesale lenders that make DSCR loans on Illinois rentals, then show you which program fits your building, your vesting, and your rent.

I don't name lenders on this page, because the best fit changes with the property and with each lender's current guidelines. On a Chicago file, these are the questions that separate one program from another:

• Does it handle 2 to 4 unit buildings and 5 to 9 unit buildings, or only single family?
• How does it read a rent roll with month to month tenants or one vacant unit?
• Will it accept your vesting, whether that is your own name, an LLC, or a land trust?
• How does it treat an older building's condition on the appraisal?
• What reserves does it want once you own several rentals?

One application with me covers that comparison, instead of you repeating it bank by bank.

In Cook County, taxes are often the line that decides whether the rent covers the payment, so I budget them carefully. The Cook County Assessor reassesses one third of the county each year on a three year cycle that rotates among the City of Chicago, the north suburbs, and the south and west suburbs. A building bought just before its area's reassessment year can see a different bill afterward.

The seller's bill can also be misleading. The Cook County Homeowner Exemption is only for owners who live in the property as their principal residence. As an investor you will not carry it, so your bill after the purchase can be higher than what the seller paid. Cook County bills also come in two installments, and the second installment is where the current year's changes show up.

I don't use a rule of thumb for any of this. I ask for the parcel's current tax record and build the payment from a realistic number for an investor owner. If you are not sure what that number should be, your Illinois attorney or the Assessor's Office can help you pin it down. Outside Cook County, each county sets its own process, and I take the same parcel by parcel approach.

Most of this is already in your deal folder:

• The address, the county, and the number of units
• Current leases, or the rent you expect for each unit
• The parcel's current property tax record
• A landlord insurance quote for the whole building
• Your vesting plan: personal name, an Illinois LLC, or a land trust
• Confirmation that you and your family will not live in any unit

With those, I can run the coverage ratio on real figures and tell you which programs are worth your time.

Residential home loans in Maine and Florida. DSCR loans on investment and rental properties in 37 states. Illinois is on that DSCR list, with No under LLC vesting required. The list covers business purpose loans on non owner occupied residential property with 1 to 9 units.

Business purpose has a specific meaning. Federal Truth in Lending commentary treats credit to buy or improve a rental you won't occupy as business purpose, and if you expect to stay in the property more than 14 days in the coming year, it no longer counts as non owner occupied under that rule. DSCR loans are for investment and rental properties only. Primary and second homes are available in Maine and Florida, so a home you plan to live in, in Chicago or anywhere else in Illinois, is not a loan I can do there.