Chicago is a big short-term rental city with a detailed licensing system. Outside the city, Galena, the Starved Rock area and Southern Illinois cabins serve weekend travelers from Chicago and St. Louis.
In short: LendingStreet makes DSCR loans on Illinois short-term rentals, and some programs size the loan on a third-party projection of short-term rental revenue rather than a 12-month lease. Qualification runs on the property, not your personal income: 620 minimum credit, loans from $150,000 with no stated maximum and LLC ownership allowed. In Chicago, the building type, condo rules and the license decide eligibility, and high property taxes across the state weigh on the ratio.
Chicago draws tourists, conventions, sports and business travel. Neighborhoods such as Lincoln Park, Wicker Park, Logan Square, West Loop and Lakeview see strong demand, and single-family homes and larger buildings are treated differently from two- to four-unit buildings under city rules.
Galena, in the northwest corner of the state, is a historic river town popular for weekends and weddings, with cabins and homes near the Galena Territory. Utica near Starved Rock State Park, the Shawnee National Forest area in Southern Illinois, the Chain O'Lakes and Champaign-Urbana game weekends round out the market.
| Market | Who books | What to check |
|---|---|---|
| Chicago | Tourists, conventions, business | City license, building type, prohibited list |
| Galena | Weekend and wedding guests | City or county rules, HOA in the Galena Territory |
| Starved Rock area | Hikers, families | County rules, septic |
| Shawnee National Forest | Cabin and wine trail guests | Access, well and septic |
Chicago requires short-term rentals to be licensed or registered and keeps a list of buildings where they are prohibited. In two- to four-unit buildings, shared housing is generally limited to buildings where the owner lives. Condo boards can bar rentals, and the city allows voters in individual precincts to restrict new rentals. Chicago also adds a surcharge on short-term rental stays on top of hotel taxes.
Outside Chicago, rules are local. Some suburbs require licenses or limit rentals, while many downstate towns and counties have few specific rules. HOAs, including those in planned resort communities, can impose their own limits.
Instead of asking for your tax returns, the lender divides the property's income by its full monthly payment, including taxes, insurance and HOA dues. For a vacation rental with no history, some programs accept a third-party revenue projection built from comparable listings. If the property already rents nightly, its booking history can carry more weight.
Most programs look for a ratio of at least 1.0x, and sub-1.0 options exist. Purchase leverage goes up to 80% LTV and cash-out up to 75% LTV, with lower limits on some short-term rental programs and large loans. Loans start at $150,000, the minimum credit score is 620 and 30-year terms are available. Anything from a single condo to an eight-unit building fits the residential program; larger buildings go through commercial lending.
Illinois applies a state hotel operators' occupation tax to short-term stays, and Chicago, Cook County and many other local governments add hotel taxes. Platforms collect many of these, but direct bookings require your own registration.
Illinois has some of the highest property taxes in the country. Cook County reassesses on a three-year cycle by region, and homestead exemptions only apply to an owner's primary residence, so investors often pay more than the seller did. Use the full bill without exemptions.
Insurance must cover short-term rental use. Older Chicago buildings may need updated electrical, porches and fire safety before carriers will write a policy. Southern Illinois cabins can face questions about wood stoves and access.
Galena Territory homes often carry association dues for roads, the lake and amenities, and some associations set rules on rentals. In Chicago, condo assessments in older high-rises can be large and are part of the payment, so a building with lower dues can make the same revenue go further.
This example is illustrative and not a quote. An investor buys a three-bedroom home near Galena for $395,000. A projection for comparable homes shows $42,000 a year in gross revenue. At 75% LTV the loan is $296,250, and estimated principal and interest on a 30-year term is about $2,071 a month. Add $640 in taxes, $170 in insurance and $90 in HOA dues, and the payment is about $2,971. $3,500 of average monthly revenue divided by that payment gives a DSCR of about 1.18x.
Putting 30% down changes the picture: a $276,500 loan, a payment of about $2,833 and a DSCR of about 1.24x, with $19,750 more due at closing. The tax line is large for the price, which is typical in Illinois. The same revenue on a similar home in a lower-tax state would leave a wider margin.
| Item | Amount |
|---|---|
| Purchase price | $395,000 |
| Loan amount at 75% LTV | $296,250 |
| Down payment | $98,750 |
| Projected annual revenue | $42,000 |
| Average monthly revenue | $3,500 |
| Estimated principal and interest (30-year) | $2,071 |
| Property taxes | $640 |
| Insurance | $170 |
| HOA dues | $90 |
| Total monthly payment | $2,971 |
| DSCR | About 1.18x |
Chicago peaks in summer, with festivals, baseball and lake weather, and is steadier during the convention season. Galena and the Starved Rock area are strongest from May through October and for fall color and holidays. Southern Illinois peaks in fall. Winter is slow outside Chicago.
Most delays come from missing items. Pull these together first:
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, projected revenue and target leverage. The financing team checks the ratio at a few loan amounts, flags local permit or HOA issues it sees, and comes back with options, including a long-term-rent fallback if the nightly numbers are thin.
We lend in Cook, Jo Daviess, LaSalle, Lake and the rest of Illinois's counties. Call (877) 298-1001 or use the form below to get a quote.
Generally not. Chicago limits shared housing in two- to four-unit buildings to owner-occupied buildings. Single-family homes and larger buildings follow different rules.
Yes. Voters in individual precincts can restrict new rentals, and condo boards can bar them. Check the precinct and building.
Illinois taxes are high, and investors do not get homestead exemptions, so the tax line takes a big bite out of the ratio.
On some programs, yes, if local rules and any HOA allow nightly rentals.
You can put more down, look at a sub-1.0 DSCR program or qualify on long-term market rent instead. Our guide to low STR projections, linked below, walks through each option.
Yes. LLC borrowers are standard on DSCR loans, and you sign for the loan personally as the owner of the entity.
No. Our investor loans are business-purpose loans on non-owner-occupied property, not second homes or residences.
Yes. The appraiser estimates market rent, and on short-term rental programs the revenue figure may come from a third-party projection or booking history. Both feed into the ratio.
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