Illinois is a prime market for real estate investors, offering strong rental demand and appreciating home values. With a DSCR loan, you can secure financing based on rental income without needing W-2s, tax returns, or pay stubs. This flexible financing option makes it easier to scale your portfolio and maximize returns.
With years of experience helping both domestic and international investors, I’ve seen firsthand how the right loan product can make all the difference. For many of my clients, DSCR loans have been the key to acquiring cash-flowing properties and expanding their holdings without the usual financing roadblocks.
Whether you’re eyeing short-term rentals in Chicago or long-term investments in Naperville, DSCR loans provide a hassle-free way to fund your next property.
Get a DSCR loan in Illinois through HomeAbroad and start your investment journey today!
Table of Contents
Key Takeaways:
1. DSCR loans simplify the investment process by focusing on the property’s cash flow rather than personal income.
2. Unlike traditional loans, DSCR loans don’t require extensive income verification, W-2s, or tax returns making them more accessible for investors.
3. DSCR loans can be used to finance various property types, including short-term rentals, long-term rentals, and multi-family properties.
What is a DSCR Loan?
A Debt service coverage ratio loan, also known as a DSCR loan, is a financing option tailored for real estate investors. Unlike traditional mortgages that rely on personal income verification, DSCR loans focus on a property’s ability to generate rental income sufficient to cover mortgage payments.
Properties with rental income exceeding their mortgage expenses not only qualify for DSCR loans but also provide investors with the potential for positive cash flow, helping them scale their portfolios faster.
With an average rental yield of 8%, Illinois offers strong cash-flow opportunities for investors. DSCR loans allow investors to acquire high-yield rental properties in cities like Chicago, Aurora, and Champaign without the usual income verification hurdles.
How to Calculate the DSCR Ratio?
The Debt-Service Coverage Ratio (DSCR) measures a property’s ability to generate enough rental income to cover its mortgage payments.
DSCR Formula:
A DSCR of 1.25 means the property generates 25% more income than the total debt obligations, demonstrating its ability to cover the monthly payments.
HomeAbroad typically requires a minimum DSCR of 1 for loan approval. However, in certain cases, we offer a No-Ratio DSCR program, allowing investors to qualify even with a DSCR as low as 0.75. This flexibility ensures that more investors can secure financing and move forward with their real estate goals.
Requirements of DSCR Loan in Illinois
When applying for a DSCR loan in Illinois, understanding the key requirements is crucial for both domestic and global investors. here are the requirements for each:
| Features | Domestic Investors | Global Investors |
|---|---|---|
| DSCR Ratio | 1 or Higher (No Ratio DSCR Program Available) | >= 1 for best terms, <1 eligible with higher down payment |
| Credit Score | Minimum 620 | No US credit needed |
| Down Payment | 20% | 25% |
| LTV Ratio | Up to 80% for Purchase and Rate/Term Refinance, Up to 75% for Cash Out Refinance | Up to 75% for Purchase and Rate/Term Refinance, Up to 70% for Cash Out Refinance |
| Cash Reserves | 2 months | 6 months |
| Property Use | Investment properties (residential and commercial) | Investment properties (residential and commercial) |
| Loan Amount | $75K – $10M | $75K – $10M |
One first-time investor I worked with struggled to get approved for a traditional loan due to strict income requirements. Despite finding a rental property with strong cash flow, banks kept turning them down. With our DSCR loan, they qualified based on the property’s rental income alone, making their first investment seamless.
At HomeAbroad, we offer tailored DSCR loans with expert guidance, helping investors secure the best financing options in Illinois. From application to closing, we streamline the process for a seamless investment experience.
Where We Lend DSCR Loan in Illinois
- Chicago
- Naperville
- Peoria
- Rockford
- Champaign
- Elgin
- Joliet
- Bloomington
- Aurora
- Glenview
- Belleville
- Berwyn
To illustrate how we help investors achieve their goals, let’s look at a real-life example of our client who successfully secured a DSCR loan in Illinois.
Case Study: Investing in Illinois with a DSCR Loan
Henry, a real estate investor, wanted to expand his portfolio by purchasing a rental property in Chicago. With the help of Jason Saylor, an experienced loan officer at HomeAbroad, he seamlessly secured a DSCR Loan that perfectly matched his investment goals.
Property Details
Location: Chicago, Illinois
Property Price: $359,900
Monthly Rent: $3,552
Loan Details
Loan Amount: $269,925
Down Payment: $89,975 (25%)
Loan Term: 30 years fixed
Monthly Mortgage (PITIA): $2,605
DSCR Calculation
DSCR = Gross Rental Income ÷ PITIA
DSCR = $3,552 ÷ $2,605
DSCR = 1.36
With a DSCR of 1.36, the property generated a positive cash flow of $947 monthly after covering all debt obligations. HomeAbroad’s expertise made the financing process seamless, helping Henry secure the right loan for his investment.
With years of experience helping investors secure the right financing, I’ve seen how DSCR loans open doors to smarter real estate investments. By focusing on rental income, investors can scale their portfolios without the usual income hurdles.
Jason Saylor, Sr. Customer Loan Specialist
Top Places to Invest in Illinois with a DSCR Loan
Illinois offers strong investment potential, with an average rental yield of 7.8%, making it an excellent market for real estate investors. A DSCR loan helps take advantage of this opportunity by allowing investors to qualify based on rental income, making it easier to secure financing and build a profitable portfolio.
Here are some of the best cities in Illinois for real estate investors using a DSCR loan:
City | Rental Type | Rental Yield |
|---|---|---|
Chicago | Short-Term | 16.6% |
Champaign | Short-Term | 14.3% |
Peoria | Long-Term | 10.7% |
Aurora | Long-Term | 9.3% |
Rockford | Long-Term | 8.9% |
Need help finding the right investment property? Our AI-driven investment property search platform can help you discover high-performing rentals in Illinois or anywhere in the US!
Get a HomeAbroad DSCR Loan in Illinois
HomeAbroad simplifies real estate investing by offering tailored DSCR loans with competitive rates and flexible terms for both US and global investors.
Finding the right investment property is just as important as securing financing. Our AI-driven property search and expert local agents help identify high-yield opportunities. Additionally, we assist with LLC formation, US bank account setup, and property management, ensuring a smooth and hassle-free investment experience.
Get a DSCR loan with HomeAbroad today and start growing your real estate portfolio!
Pre-qualify for a DSCR Loan in a Few Clicks.
No Paystubs, W2s, or Tax Returns Required.
Frequently Asked Questions
Are DSCR loans hard to get in Illinois?
DSCR loans in Illinois are generally easier to qualify for compared to conventional loans because they focus on the rental income of the property rather than your personal income documents like bank statements, tax returns or credit history.
What is the current rate for DSCR loans in Illinois?
DSCR loans in Illinois come with a slightly higher interest rate, usually around 1-2% higher than standard interest rates for traditional mortgages.
You can check the latest DSCR interest rate here.
What is the maximum DSCR loan amount?
HomeAbroad offers DSCR loans with a maximum amount of up to $10 million, depending on the property’s rental income and eligibility criteria. This allows investors to finance high-value properties with ease.
Can I live in a home bought with a DSCR loan?
No! DSCR loans are specifically designed for investment properties and typically do not allow for owner-occupancy. Suppose you are looking to purchase a home to live in. In that case, it is recommended to consider a conventional mortgage or other types of residential home loans that cater to owner-occupancy.
At HomeAbroad, we ensure the reliability of our content by relying on primary sources such as government data, industry reports, firsthand accounts from our network of experts, and interviews with specialists. We also incorporate original research from respected publishers when relevant. Discover more about our commitment to delivering precise and impartial information in our editorial policy.
AirDNA: https://www.airdna.co/vacation-rental-data/app/us/illinois
Zillow: Housing Data – Zillow Research
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