Chicago's two-flats and three-flats are some of the most common investor buys in the Midwest, and many are bought and renovated with short-term money. A DSCR rate-and-term refinance replaces that loan with long-term financing qualified on the rent.
In short: Yes, LendingStreet finances DSCR rate-and-term refinances on 1-8 unit investment properties in Illinois, up to 80% LTV on some programs, qualified on the property's rent with no W-2s or tax returns. The new loan pays off your existing hard money, bridge or higher-rate loan plus closing costs, with only a small amount of cash back allowed on most programs. Our investor loans are business-purpose loans on non-owner-occupied property, starting at $150,000 with a 620 minimum credit score. In Illinois, Cook County property taxes and the city's landlord rules are the items that shape most Chicago files.
In a rate-and-term refinance, the new DSCR loan retires your existing debt and nothing more, apart from closing costs and, on most programs, a small amount of cash back. You are changing the price and shape of the debt, not the amount of equity you hold.
Leverage can reach up to 80% LTV on some programs, compared with up to 75% on a cash-out. The loan qualifies on the property's rent, not your W-2s or tax returns. The ratio of rent to the full new payment, including taxes, insurance and HOA dues, needs to be at least 1.0x on standard programs.
Chicago and its inner suburbs have a deep stock of brick two-flats, three-flats and small courtyard buildings, plus bungalows and frame cottages. Investors buy with hard money, renovate and refinance into permanent debt. Outside Chicago, Rockford, Peoria, Springfield and Champaign-Urbana have lower prices and many single-family and duplex rentals.
Rate-and-term is also the cleaner choice when the property's rent only modestly exceeds the payment. Adding cash-out raises the balance and lowers the ratio, while a rate-and-term keeps the debt where it is and focuses on better terms.
Short-term loans are interest-only and come due quickly, which works during a rehab but not for a long-term hold. A rate-and-term DSCR refinance replaces that debt once the property is stabilized and leased.
Timing matters. Lenders consider how long you have owned the property when deciding whether to use the new appraised value or your cost basis, and that rule varies by program. Order the appraisal early and keep invoices and receipts for the work you did.
Illinois and Chicago transfer taxes apply to deed transfers, not a standard refinance, and there is no state mortgage tax. Refinance costs are mostly recording, title, appraisal, attorney and lender charges. Attorneys are commonly involved in Illinois closings.
If you move title into an LLC as part of the refinance, transfer declarations and possible exemptions apply, so ask the title company or attorney before you deed the property.
Cook County property taxes are high, and reassessments every few years can raise them sharply. On a two-flat or three-flat, the tax bill can be a large part of the payment. Use the current bill and watch for reassessment, and know that appeals are common.
Chicago's residential landlord and tenant ordinance sets rules on deposits and leases, and building code issues on older masonry and porches come up in inspections. Insurance on older frame and brick buildings depends on electrical, plumbing and roof updates.
This example is illustrative and not a quote. An investor owns a brick two-flat in Chicago appraised at $420,000. The existing hard money loan used for the purchase and renovation has a payoff of $300,000, costs about $2,690 a month interest-only and matures in 3 months. Rent is $3,200 a month, and taxes, insurance and any HOA dues run $750 a month.
Rolling about $9,000 of closing costs into the loan gives a new balance of $309,000, or about 73.6% LTV, inside the 80% ceiling some programs allow. On a 30-year term, principal and interest is about $2,108, so the full payment is about $2,858 and the DSCR is about 1.12x. The short-term maturity is gone and the payment is fixed. The rent could fall by about $342 a month before the ratio hit 1.0x.
| Item | Amount |
|---|---|
| Appraised value | $420,000 |
| Existing loan payoff | $300,000 |
| Closing costs rolled in | $9,000 |
| New loan amount | $309,000 |
| Loan-to-value | 73.6% |
| Principal and interest (30 years) | About $2,108 |
| Taxes, insurance and HOA | $750 |
| Total monthly payment | About $2,858 |
| Monthly rent | $3,200 |
| DSCR | About 1.12x |
The two refinances use the same DSCR underwriting, but the limits differ. Here is how they line up on a typical 1-8 unit rental.
If you are unsure which fits, ask for a quote on each. The difference in loan amount, payment and DSCR on the same Illinois property usually makes the choice clear, and the form below can request either.
| Feature | Rate-and-term | Cash-out |
|---|---|---|
| Purpose | Pay off existing loan and costs | Pay off loan and take equity |
| Maximum LTV | Up to 80% on some programs | Up to 75% |
| Cash at closing | Small allowance, varies by program | Up to the LTV limit |
| Minimum DSCR (standard) | 1.0x | 1.0x |
| Minimum credit score | 620 | 620 |
| Income documents | Rent only, no W-2s or tax returns | Rent only, no W-2s or tax returns |
Chicago neighborhoods such as Logan Square, Avondale, Pilsen, Bridgeport, Brighton Park and the South Side offer a range of two- to four-unit buildings at different price levels. Inner suburbs like Berwyn and Cicero have many two-flats. Rockford, Peoria and Springfield offer lower prices, and Champaign-Urbana and Normal have university demand. Small 5-8 unit buildings are common in Chicago and may see lower maximum LTV.
Most delays come from missing paperwork. Pull these together before you request a quote. Call (877) 298-1001 or use the form below to get a quote.
Yes. LendingStreet offers rate-and-term DSCR refinances on 1-8 unit investment properties in Illinois, from $150,000 with no stated maximum, qualified on the property's rent.
Illinois and Chicago transfer taxes apply to deed transfers, so a standard refinance usually avoids them. Deeding the property into an LLC can change that.
Only a small amount on most programs, and the allowance varies by program. If you want to pull equity out, a cash-out refinance up to 75% LTV is the better fit.
The tax bill is part of the monthly payment. On Chicago two- and three-flats, a high or rising bill can lower the ratio noticeably.
Often, yes, but seasoning rules vary by program. Some use the new appraised value; others cap the loan near your cost basis if you bought recently.
Yes. Two- to four-unit buildings are standard residential DSCR collateral, and rent from all units counts.
Standard programs require a minimum of 1.0x, meaning rent covers the full payment. Sub-1.0 programs exist for properties that fall short, with tighter terms.
No. The loan qualifies on the property's rent, not your personal income. You still need a 620 or higher credit score, reserves and entity documents if the property is in an LLC.
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