Debt Service Coverage Ratio (DSCR) Loans in Illinois


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Debt Service Coverage Ratio Loans

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Best DSCR Loans in Illinois

Key Terms

  • DSCR loans in Illinois focus on property income, making them ideal for diverse investment strategies without extensive personal income documentation.
  • These loans offer versatility, allowing financing for single-family homes, multifamily units, and commercial properties across Illinois’s dynamic real estate market.
  • Though DSCR loans can lead to higher interest rates and require larger down payments, they provide significant advantages in competitive markets like Chicago.

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You’re our first priority. We want you to understand how we make money. This post may contain affiliate links. Biglaw Investor may receive a commission at no additional cost to you if you click on the links in this article. This may influence which products we write about and where and how the products appear on a page. However, it does not influence our evaluations. Our opinions are our own. In some circumstances, if you work with us, we are able to provide an incentive to work with our advertising partners that is unavailable if you work with our advertising partners directly. Our partners cannot pay us to guarantee favorable reviews of their products or services. To read more about how we make money, click here.

Easy Street Capital

(All 50 States Except NV, ND, SD)

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usually responds within 30 minutes

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Easy Street Capital

(All 50 States Except NV, ND, SD)

Easy Street Capital’s EasyRent loan program provides DSCR loans for cash-flowing investment properties. Flexible underwriting and ultra-competitive terms.

Loan Products

  • DSCR Loans: With rates starting at just 5.99% interest rates, 20% minimum down payment, no DSCR minimum, vacant properties OK.
  • Short Term Rental Loans: Leading loans for short term rentals (Airbnb); qualify with AirDNA projections and no operating history required. Rural, Vacation, and Seasonal Markets OK.
  • BRRRR Loans: Cash-out refinance DSCR Loans up to 75% with low seasoning requirements, 100% of capital invested returned in as little as 3 months
  • Multifamily Loans: 5-10 Unit properties financed on 30-year fixed rate loans with interest-only and easy qualification options. Mixed Use Loans: DSCR Loans for Mixed Use properties up to 8 units (including up to 3 commercial units)
Lender Facts
Minimum Loan

$100,000

What We Do
  • DSCR Loans Rates starting at 5.99%
  • 30-Year Fixed Rate; 10-Year Interest-Only Available
  • No DTI, No W2, No Tax Returns Needed
  • Borrow through an LLC or Entity
Not Available
  • No renovations needed
  • No properties > 10 units
  • No owner-occupied properties
  • No credit below 640

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You’re our first priority. We want you to understand how we make money. This post may contain affiliate links. Biglaw Investor may receive a commission at no additional cost to you if you click on the links in this article. This may influence which products we write about and where and how the products appear on a page. However, it does not influence our evaluations. Our opinions are our own. In some circumstances, if you work with us, we are able to provide an incentive to work with our advertising partners that is unavailable if you work with our advertising partners directly. Our partners cannot pay us to guarantee favorable reviews of their products or services. To read more about how we make money, click here.

New Silver Lending

(All 50 States Except AL, AK, ID, LA, NV, ND, OR, SD, UT, VT)

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Online

usually responds within 30 minutes

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New Silver Lending

(All 50 States Except AL, AK, ID, LA, NV, ND, OR, SD, UT, VT)

Expand your rental portfolio with New Silver’s lightning-fast DSCR loans, closing in days, not weeks. Get approved online in under 5 minutes, including an instant online term sheet.

Ready to grow your portfolio with confidence? Apply now and see how fast and easy real estate investing can be with New Silver Lending at your side.

Loan Products

  • DSCR Loans: A 30-year fixed loan tailored for rental properties—ideal for growing your rental portfolio. Up to 80% LTV. No minimum DSCR required.
  • Fix & Flip Loans: Hard money loans designed for purchasing, renovating, and reselling investment properties—perfect for executing quick fix-and-flip projects.
  • Ground Up Loans: Up to 100% construction financing for residential builders—ideal for developers ready to break ground.
Lender Facts
Minimum Loan

$150,000

What We Do
  • 30-year fixed rate—no rate surprises
  • No minimum DSCR—flexibility you need
  • Up to 80% LTV—maximize your leverage
  • Instant term sheet
  • Instant proof of funds
  • Special discounts for repeat borrowers
  • Short Term Rental Loans also available
Not Available
  • No rural properties
  • No properties > 8 units
  • No owner-occupied properties
  • No 100% financing

From the bustling streets of Chicago to the serene downstate farmlands, Illinois presents a wide array of real estate opportunities. DSCR loans in Illinois are particularly advantageous, focusing on property income potential rather than personal financial history, making them perfect for diverse investment strategies.

According to the Federal Reserve, the homeownership rate in Illinois is [fred_homeownership state=”IL”], indicating a strong preference for owning homes. This solid foundation provides promising conditions for investors looking to engage purchasers or secure reliable tenants.

The vacancy rate in Illinois, detailed by the US Census Bureau, stands at [fred_vacancy_rate state=”IL”]. This level of unoccupied properties is crucial for investors considering DSCR loans, impacting how swiftly they can turn ventures into profit-making assets through sales or rentals.

Furthermore, the median listing price of homes in Illinois, sourced from the St. Louis Fed, is currently $289,000. This price point reflects the state’s affordability in real estate, making Illinois an attractive locale for both newcomers and seasoned investors.

This guide will delve into the specifics of DSCR loans within Illinois, discussing the benefits and operational details of these loans. It will also cover what potential investors need to know about choosing the best loan providers and understanding the advantages and potential drawbacks of such financial decisions in Illinois’s dynamic real estate market. 

What are the main advantages of an Illinois DSCR loan?

Illinois, with its diverse real estate market ranging from the bustling urban environment of Chicago to its tranquil rural areas, offers a promising landscape for real estate investors. Debt Service Coverage Ratio (DSCR) loans present unique benefits for those looking to invest in rental properties or other income-generating real estate. Here are a few of the main advantages of DSCR loans in Illinois:

1. Qualification based on property income: DSCR loans allow borrowers to qualify based on the rental income generated by their investment properties rather than their personal income. This is particularly advantageous for real estate investors and self-employed individuals who may have fluctuating personal incomes. By focusing on the property’s cash flow, DSCR loans make it easier for borrowers to secure financing without the need for extensive personal income documentation. This gives you more options for cash flow with cash out refinance tools often needed in the real estate investing world.

2. Potential for higher loan amounts: Since DSCR loans are based on the property’s ability to generate rental income, they often allow for higher loan amounts. This is particularly beneficial in competitive real estate markets like Chicago, where access to substantial financing can provide a significant edge in acquiring high-value properties.

3. Versatility in property types: DSCR loans in Illinois can be used for a variety of property types, including single-family homes, multifamily units, and commercial properties. This flexibility allows investors to diversify their portfolios and explore different real estate opportunities, maximizing their investment potential.

4. Advantageous loan terms: These loans typically offer flexible loan terms, including competitive interest rates and favorable repayment schedules. This helps investors maintain positive cash flow and manage their debt obligations effectively, enhancing the overall profitability of their investments.

5. Simplified income verification: Unlike traditional mortgage loans, DSCR loans focus less on the borrower’s personal credit score and income verification. This simplifies the application process and makes it more accessible for those with complex financial situations or lower credit scores.

The pros/cons of pursuing a DSCR loan in Illinois

When considering a DSCR loan in Illinois, it is important to weigh the various advantages and disadvantages to determine if this financing option aligns with your investment strategy. Here are some of the main considerations to keep in mind:

Pros:

Income-based qualification: DSCR loans enable borrowers to qualify based on the rental income generated by their investment properties. This is particularly beneficial for real estate investors with variable personal incomes or those who prefer to keep their personal and business finances separate.

Higher loan amounts: By leveraging the property’s cash flow, DSCR loans can offer higher loan amounts. This is advantageous in Illinois’ competitive real estate market, where substantial financing can facilitate the acquisition of valuable properties.

Different property types: DSCR loans can be used for various property types, including single-family homes, multifamily units, and commercial properties. This versatility helps investors diversify their portfolios and optimize their investment strategies.

Simplified approval: Unlike traditional mortgage loans, DSCR loans do not heavily depend on the borrower’s personal financial history, making the approval process smoother for those with complex financial situations.

Favorable loan terms: DSCR loans typically offer flexible loan terms, helping investors manage their debt effectively while maintaining positive cash flow.

Cons:

Higher interest: DSCR loans often come with higher interest rates compared to conventional loans. This reflects the additional risk perceived by lenders when the loan is based on property income rather than personal income.

Big down payments: These loans generally require a larger down payment, which can be a barrier for some investors. The down payment can range from 25% to 30% of the property’s value.

Income requirements: To qualify for a DSCR loan, the investment property must generate sufficient rental income to meet the lender’s debt service coverage ratio criteria. Accurate income projections and thorough market research are essential to ensure the property meets these requirements.

Limited availability: Not all lenders offer DSCR loans, so finding a lender with favorable terms may require additional effort and research.

By carefully considering these pros and cons, real estate investors can make informed decisions about whether pursuing a DSCR loan in Illinois aligns with their investment goals and financial situation. With the right approach, DSCR loans can be a powerful tool for maximizing returns in Illinois’ diverse real estate market. Whether you hold short term or long term rentals in your portfolio, these tools can offer you the possibility of affordable loan payments/monthly payments through an approved DSCR mortgage lender.

Different types of loans have their own qualifying criteria, such as minimum loan amount, credit score required, and loan terms. If you’re curious about how a DSCR loan works, however, you might be familiar with other similar types of loans.

You can also think of these as similar to hard money loans, non qm loans, or bank statement loans since they use different qualification criteria to approve you. DSCR lenders will usually have this information shared on their websites so you can review the various loan products and pick the right loan program for you based on qualifying rules. Verify all the eligibility information in advance so you can choose the best lender for you once you use your net operating income. These lenders look at the property value, the property’s cash flow, and even tax returns to determine how much they are willing to offer. This DSCR ratio and other underwriting tools can make it easier for a real estate investor to get approved when compared with traditional loans.

Examples of investors who take out a DSCR loan in Illinois

Illinois, from the bustling city of Chicago to its serene suburbs and rural areas, offers a diverse range of opportunities for real estate investors. DSCR loans allow investors to focus on property income, making them particularly advantageous. Here are two examples of investors using DSCR loans in Illinois:

Example of a real estate investor: Meet John, a real estate investor in Chicago who is planning to purchase a multi-family residential property in a thriving neighborhood. By utilizing a DSCR loan, John can qualify for the loan based on the projected rental income from the property rather than his personal financial history. This strategy allows him to secure the financing needed to add a valuable asset to his portfolio, capitalizing on Chicago’s high demand for rental housing.

Example of a seasonal rental owner: Imagine Rachel, a seasonal rental owner in Galena planning to buy a vacation property in the scenic countryside. By using a DSCR loan, Rachel can qualify based on the anticipated rental income during peak tourist seasons. This approach allows her to secure the necessary financing to invest in the vacation rental market, capitalizing on Galena’s booming tourism industry and picturesque landscapes.

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.

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