In Cook County, DSCR Barely Works — and That Changes Everything
Illinois is the clearest case in the country of property taxes deciding which loan product you can use.
Cook County’s effective property tax rate runs in the range of 2.3 to 2.6 percent. On a $400,000 property that is roughly $870 to $975 a month in taxes alone, before principal, interest, or insurance. Stack that up and total PITIA on a typical Chicago single-family rental commonly exceeds market rent by 40 to 60 percent.
The resulting debt service coverage ratio lands somewhere around 0.55 to 0.65 far below the floor of any DSCR program in the market. Not marginal. Not fixable with a bigger down payment in most cases. Simply outside the product.
So for a Chicago single-family or condo rental, a 1099 loan is frequently not the alternative to DSCR it is the only door. Your documented contractor income qualifies the file that the property cannot.
Two important exceptions:
Three- and four-unit buildings change the math. Combined rents in the $5,500 to $8,000 range across multiple units can overcome the Cook County tax burden and produce a workable DSCR at moderate LTV. If you are set on DSCR in Chicago, multi-unit is the way.
Downstate is the mirror image. Single-family rentals in the $80,000 to $160,000 range renting at $900 to $1,400 produce strong coverage ratios. The constraint downstate is not DSCR it is loan minimums, since many Non-QM programs floor around $75,000 to $150,000 and a good deal of downstate inventory prices below that.
Two opposite problems, one state. Know which one you have before you shop.
The Lenders
Select Home Loans
Select Home Loans is a Non-QM mortgage broker (NMLS #2384002) writing 1099 investor loans across Illinois. The Cook County problem above is exactly why running one product is not enough we quote 1099, bank statement, and DSCR on the same property so you can see which one the county’s tax rate actually permits.
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Other lenders worth calling — listed in no particular order:
NQM Funding A wholesale Non-QM lender holding an Illinois Residential Mortgage License (#MB.6761251) with a Chicago address, offering 1099, bank statement, P&L, DSCR, and foreign national programs. Publishes Illinois-specific guidance including material on qualifying creative-professional and contractor income. Broker channel.
CMRE / Custom Mortgage (NMLS #1556995) Publishes Chicago and Cook County-specific Non-QM programs including 1099-only, 12- and 24-month bank statement, P&L only, WVOE-only, asset depletion, and no-ratio DSCR. Published minimums around 660 FICO on bank statement and DSCR.
Capital Home Mortgage Illinois Illinois operations across 1099, bank statement, asset, and DSCR programs.
Mbanc A direct lender holding an Illinois license (#MB.6761396) and publishing detailed Illinois-specific Non-QM analysis across bank statement, 1099, asset utilization, and DSCR, including multi-unit DSCR structures for Cook County.
Angel Oak Mortgage Solutions Non-QM wholesale investor licensed in Illinois with a dedicated 1099 income program. Reached through a broker.
Griffin Funding Publishes qualifying on 90 to 100 percent of gross 1099 income, 620 minimum credit, and loan amounts to $4 million.
Verify current licensure and program availability before relying on any listing. See the disclaimer at the end of this page.
How Qualifying Works
A 1099 loan qualifies you on income documented on your 1099 forms rather than the net profit shown after deductions.
Programs split into two camps. Some apply 90 percent or more of gross 1099 income with no expense deduction. Others apply an expense factor of 10 to 25 percent first.
On $180,000 of annual 1099 income:
| Method | Qualifying income |
|---|---|
| 90% of gross | $162,000/yr — $13,500/mo |
| Gross less 20% expense factor | $144,000/yr — $12,000/mo |
| Net profit from your tax return | frequently under $80,000 |
In Cook County, where you may be carrying the entire debt service on personal income rather than rent, that spread between the first two rows determines the property you can actually reach. Push on it.
One year or two
One-year suits growing income or a recent shift to independent work with prior experience in the same field.
Two-year suits contract-cycle income, which describes a lot of Chicago’s professional contractor base compliance and risk consultants working project engagements, creative professionals on retainer cycles, and anyone whose income depends on a small number of large clients.
The two-year self-employment history requirement is separate from the two-year income lookback. Ask about both.
Illinois’s 1099 Population
Financial services contractors independent compliance consultants, risk management specialists, and fintech contractors working with Chicago’s trading firms and banks on project engagements. A high-earning, low-overhead group, and the strongest fit for gross-receipts qualifying.
Creative professionals designers, photographers, producers, and content specialists whose returns show volatile income and heavy write-offs while their client relationships are stable.
Construction and specialty trades across the metro and collar counties.
Healthcare contracting around the Chicago hospital systems and the downstate university medical centers.
Owner-operator logistics along the interstate corridors, where documented business expense makes gross-receipts qualifying decisively better than the alternatives.
Other Illinois Specifics
Chicago rental registration and inspection. The city has specific requirements for rental property, and lenders will sometimes flag compliance status on a refinance of an existing rental. Confirming this before you apply speeds the property-side review meaningfully, particularly in older neighborhoods with active code enforcement.
Judicial foreclosure. Illinois forecloses through the courts, which lengthens timelines and makes Non-QM investors somewhat more conservative on leverage than in a non-judicial state.
Tax appeals are a real lever. Because Cook County assessments drive the DSCR math described above, a successful assessment appeal can move a property from unfinanceable-by-DSCR to financeable. That is outside a lender’s scope, but it is worth knowing before you write off a property.
Downstate appraisal support varies. University towns — Champaign-Urbana, Normal, Carbondale — have active investor markets and reasonable comps. Rural counties can be thin.
Out-of-state investors are common here. Illinois rent yields, particularly downstate and in specific Chicago neighborhoods, attract buyers from across the country. Illinois residency is not required.
Investment Property Terms
- Down payment: 20–25 percent typical, better pricing at 25 percent and above
- Credit: 620 floor at some investors, 660 at others on Non-QM investor programs; real improvements at 700 and 740
- Reserves: 6–12 months PITIA, and Cook County tax burden makes those months larger than they look
- Prepayment penalties: common on investment property, typically 1–3 years, often buyable at a quarter to a half point
Questions to Ask
- What is the DSCR on this property at actual Cook County taxes and if it is below floor, what is the 1099 path? (The Illinois question.)
- Do you qualify on gross 1099 income, or apply an expense factor?
- What is your minimum loan amount? (Ask this downstate.)
- Will you run both the 1-year and 2-year scenarios?
- Do you write 3–4 unit DSCR in Cook County, and at what LTV?
- What is the prepayment penalty, and what does removing it cost?
Disclaimer
The lenders described on this page are listed in no particular order. Select Home Loans appears first because we publish this page and originate these loans; we have a commercial interest in this category. No lender listed has paid for placement.
This page reflects our opinion based on publicly available information at the time of writing. It is general information, not a recommendation, an endorsement, or an offer of credit. Lender programs, guidelines, licensure, pricing, and availability change frequently and without notice, and nothing here guarantees that any lender is currently licensed in Illinois, currently offers the program described, or will approve your file.
Property tax rates, assessments, and municipal rental requirements change and are specific to individual properties; verify them independently. Consult a licensed mortgage professional and where appropriate a tax advisor, attorney, or financial advisor before making any borrowing decision. Verify any lender’s licensure through NMLS Consumer Access at nmlsconsumeraccess.org.
Select Home Loans, NMLS #2384002. Equal Housing Opportunity.
