Illinois Investment Property Loans

Investing in Illinois Real Estate

Illinois offers investors a unique mix of urban and suburban opportunities, anchored by Chicago’s robust rental market and supported by strong university towns throughout the state.

The average rental rates in Chicago are 19% higher than the national average. Despite rising prices, Illinois’s median home price of $265,991 falls below many comparable urban markets, creating attractive entry points for investors.

Illinois offers many different types of investors the potential to grow their wealth through real estate investments. Downtown Chicago’s young professional population drives demand for updated rental units. University towns like Champaign-Urbana and Normal provide steady student housing needs.

Short-term rentals thrive in tourist areas and near conference centers, while suburban properties attract families seeking more space. Property value appreciation and strong rental yields create multiple paths to investment returns.

Beyond these benefits, Illinois real estate investors may also benefit from various tax benefits, such as mortgage interest deductions, property tax deductions, depreciation deductions, and capital gains tax strategies.

Illinois Investment Property Loan Types

Every investment strategy requires the right financing approach. Here are a few popular loans for investment property in Illinois:

Conventional Loans

A conventional loan is a standard mortgage not backed by government programs. These loans require a 15-25% down payment and a credit score of at least 680. While the requirements are stricter, you will typically secure better interest rates with a larger down payment and higher credit score.

These investment property loans are ideal for investors with strong credit and documented income. However, you may face limits on the number of properties you can finance through conventional loans.

DSCR Loans

A debt service coverage ratio (DSCR) loan evaluates the property’s ability to generate enough rental income to cover expenses. Your potential rental income must exceed the property’s monthly mortgage payments to qualify for this loan type. This loan option allows you to qualify based on the property’s performance rather than your personal income.

Interest rates typically run higher than conventional loans for DSCR loans. However, these loans have become especially popular for Chicago multi-unit properties where strong rental income can offset higher purchase prices.

Bank Statement Loans

Bank statement loans offer an alternative qualification method that uses bank deposits instead of traditional tax returns to verify your income. These loans are designed for self-employed investors and gig economy workers.

The flexibility of these loans helps investors with complex income situations qualify more easily. However, borrowers may need to make larger down payments than conventional loans.

VA Loans

A VA loan provides military members and veterans with specialized financing options for property investment. These loans require owner occupancy but allow you to purchase a property with up to four units and rent out the additional spaces. The primary advantage of VA loans is a lower down payment (typically 0% if this is your first time using your benefits) and competitive interest rates.

FHA Loans

FHA loans give potential investors a low down payment option for owner-occupied properties. Anyone who meets the lending criteria for these government-backed loans can start investing in real estate with as little as 3.5% down when you plan to live in one unit of a multi-family property of up to four units.

These loans are common in Illinois’s more affordable markets. FHA loans work particularly well for first-time investors who intend to live in the property while generating rental income.

Home Equity Loans

Home equity loans let you borrow against your primary residence’s accumulated equity to finance investment purchases. These loans typically offer lower rates than direct investment property loans.

Remember that this is a second mortgage, and borrowers must understand that they are using their primary residence as collateral when taking out a home equity loan. This loan option works well for investors who have built substantial equity and want to avoid higher investment property rates.

Asset-Based Loans

Asset-based loans use your liquid investments as qualifying criteria instead of traditional income verification. You will need at least $500,000 in qualifying assets to secure this type of financing. This loan type provides flexibility for investors with significant investment portfolios. This approach works best for investors who maintain substantial investments but prefer not to liquidate them for real estate purchases.

Private Money Loans

Private money loans come from non-traditional lending sources and offer rapid funding solutions. These loans close significantly faster than conventional financing. While these loans come with higher interest rates, many borrowers appreciate the speed of funding. This loan type serves investors best in competitive market situations or when quick closing abilities could result in better purchase negotiations.

How to Get an Investment Property in Illinois

Getting an investment property loan in Illinois is just one of the steps you need to take to grow your wealth through real estate. Here’s your path to securing investment property:

1. Determine how you want to invest: Consider your options carefully. Will you focus on Chicago’s multi-family buildings? Maybe student housing near state universities? Or suburban single-family rentals? Your choice impacts which financing options work best.
2. Identify the type of financing that aligns with your goals: Match your investment type with the right loan. A multi-unit building might work best with an FHA loan if you plan to live onsite. Pure investment properties often require conventional or DSCR financing.
3. Find a property and apply for financing: Begin your property search with clear goals and financing in mind. Once you’ve identified a promising property, gather your financial documentation, including tax returns, bank statements, and proof of income. Getting pre-approved can strengthen your position with sellers.

Why Choose Griffin Funding?

As your investment property lender in Illinois, we offer distinct advantages:

• A lot of experience: Our team understands Illinois markets and how different loan programs serve various investment strategies.
• Flexible solutions: We provide multiple loan options tailored to your specific investment strategy and situation.
• Personalized service: Work with dedicated professionals who understand local market dynamics and will guide you through the entire process.
• Competitive rates: Our direct lending model helps you secure competitive terms for your investment property.

Get a Rental Property Loan in Illinois

Our experienced team of mortgage experts provides guidance and tailored lending solutions necessary to achieve your goals. Whether you’re a seasoned investor expanding your real estate portfolio or a first-time buyer entering the market, we’re here to support your success.

Streamline your investment journey with the Griffin Gold app, your comprehensive tool for discovering, analyzing, and managing investment properties and loans. Apply now or contact us to explore your Illinois rental property loan opportunities.