Illinois is one of the most populous states in America. It is also one of the most diverse, with many different cultures and languages represented in its population. The state’s capital is Springfield, which is also home to the Abraham Lincoln Presidential Library and Museum.
The population of Illinois in 2022 is projected to be approximately 12.5 million people, with the number growing annually. As it stands now, there are roughly 1 million more people living in Illinois than there were during the 2010 census period.
The median price for a home in Illinois in 2022 is projected to cost homebuyers $276,000 according to the Illinois Realtors Association. This number represents an increase over the current average home price for this state (about $230,000), but not by much; it’s still on par with other expensive states like Massachusetts ($269,000).
There are many reasons why so many borrowers are turning to construction loans rather than using a traditional home loan to purchase an existing house in Illinois right now. Let’s take a look at some of the benefits associated with getting a construction loan in Illinois.
Benefits of a new construction loan in Illinois
Traditional mortgage loans and real estate lending facilities can be complicated, restrictive, and are generally designed to ensure that the lender makes the most money. However, new construction loans are just the opposite; they are designed to help the homeowner profit, either by constructing the home of their dreams or else by increasing the odds of the homeowner generating a quick and reliable profit on the construction. Plus, there are several other benefits people enjoy when getting a new construction loan.
One of the biggest benefits is that you’re able to get the money you need to start your construction project right away. You don’t have to wait until the project is completed. A typical short-term construction loan involves getting qualified for the total loan amount upfront and then making interest-only payments during the construction phase.
Another benefit is that getting an Illinois construction loan allows you to build a dream home that is specific to the needs of your family. It may be harder to qualify for a construction loan as compared to a traditional mortgage but if you have the patience to plan and build a custom home you will be rewarded with something built just for you.
4 Best construction loan lenders in Illinois
1. First American Bank
First American Bank has locations in Illinois, Florida and Wisconsin. The bank started in Chicago but now has 61 locations and over $5 billion in assets, giving the bank lots of flexibility when it comes to lending across various financial products.
We contacted First American Bank to specifically gather information about their construction loan rates. Here is what they told us:
- Eligibility: Individuals that have a First American Bank deposit or trust relationship 30 days, or more, prior to application
- Fixed interest rate loan options
- Flexible construction terms
- Financing for remodeling and additions, as well as new home construction
- Underwriting decisions are made locally, speeding up the approval process
If you’re interested in connecting directly with a loan officer at First American Bank that specializes in construction loans, we can put you in touch with them directly.
2. First Midwest Bank
First Midwest Bank can trace its roots back to 1870 and is headquartered in Chicago, Illinois. Mainly a regional bank for the state of Illinois, they have plenty of experience with financial products.
We contacted First Midwest Bank to learn more about the construction loan product they offer and here are the highlights:
- Offers a construction to permanent loan
- Lock in your interest rate at the outset of construction — not when the home is completed.
- You also get the financial flexibility to afford building your new home while living in your current one.
- Can lend with as little as 10% down depending on credit approval
- Credit scores of 700 or higher,
- Maximum debt-to-income ratio of 40% (credit cards and other lines of credit)
- Can include land loan in the construction loan
If you’re interested in connecting directly with a loan officer at First Midwest Bank that specializes in construction loans, we can put you in touch with them directly.
3. Citizens Equity First Credit Union (CEFCU)
Citizens Equity First Credit Union (CEFCU) is a federally insured credit union based in Peoria, Illinois founded in 1937 to serve the employees of the Caterpillar Tractor Company. It has since opened its doors to a significantly wider audience but it’s good to know its history.
We noticed that CEFCU has a construction loan and so did some digging to find out the details for you. Here is what we learned:
- Pay closing costs once when you combine construction costs and long-term financing with the Construction/Permanent Loan.
- Apply when you have a contract with a builder.
- Close within 60 days of application.
- Make interest-only payments for up to 12 months.
- Pay interest only on money used during construction.
- Let CEFCU handle payments on things like materials.
- Use the equity in your lot as part of a down payment.
- Fixed-Rate or Adjustable-Rate mortgages available.
- After 12 months, the Permanent financing begin.
- Lock your interest rate for up to 12 months while your home is being built. Then you can enjoy that same rate for your full Mortgage term.
If you’re interested in connecting directly with a loan officer at CEFCU that specializes in construction loans, we can put you in touch with them directly.
4. Wintrust Mortgage
Wintrust Mortgage is one of the top 20 bank-owned retail mortgage originators in the country that originates in excess of $4 billion in loans annually in all 50 states.
Recently we asked Wintrust Mortgage to provide us with details on their construction loan and this is what they said:
- One-Time Closing. Only pay the closing cost once
- Lock in your rate upfront and avoid interest rate risk
- FHA, VA, and Conventional options
- 0% Down up to $822,375 (VA ONLY)
- 3.5% Down up to FHA County Limits ($356,362-822,375)
- 10% Down on Second homes
- FICO 680+
- Loans must include building no Lot/Land Loans
- Maximum of 10-acres per build site
- Stick Built and Modular Homes ONLY
- NO log homes or metal homes (barndominium)
- Tear Down and Rebuilds do qualify
- No self-build or owner builders. The builder must be approved.
- Does Not allow ADUs (Accessory Dwelling Unit – Granny Flat/Garage Conversions/Basement)
- Now lending in all 50 States
If you’re interested in connecting directly with a loan officer at Wintrust Mortgage that specializes in construction loans, we can put you in touch with them directly.
Does an Illinois construction loan make sense for you?
Construction loans can be a great way to get the home you’ve always wanted. But they aren’t right for everyone. If you’re thinking about getting a construction loan, there are some things that you will definitely want to consider.
What kind of house do you want? If you know exactly what kind of home you want to build or renovate, it will be easier for your lender to give an accurate estimate of what your loan amount will be. You’ll also have a better idea of how much money you’ll need at closing and how much equity in your home will be available for other purposes.
Do you have enough cash on hand in checking and savings accounts? If so, then a traditional mortgage may be better for you because rates tend to be lower than those offered by construction loans. However, if you don’t have enough cash on hand and can’t wait until the house is finished before moving in, then an Illinois construction loan might make more sense because there are usually no closing costs associated with this type of loan, and there are no escrows required while construction is underway.
If you’re looking to explore construction loans in other states, check out our national guide to construction loans and get started exploring all 50 states.
Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.