Pilsen’s 18th Street is lined with brick buildings that have a storefront at street level and apartments above — taquerias, bakeries, galleries, and barber shops with two or three units stacked on top. These mixed-use buildings are some of the most sought-after rental properties on the Lower West Side. They are also some of the most misunderstood when it comes to permanent financing.
DSCR loans in Pilsen work on these buildings, but the lender doesn’t treat a storefront the same way it treats an apartment. Here’s how the ratio is calculated on a mixed-use building, what counts and what doesn’t, and how to set up the refinance before you buy. For the acquisition and rehab loan, see hard money loans in Pilsen.
How DSCR lenders count Pilsen mixed-use income
A DSCR loan sizes to rent, not your personal income. The ratio compares the property’s monthly rent to its monthly payment, taxes, insurance, and association dues. On a mixed-use building, the lender looks at two income streams:
- Apartment rent counts at the lower of the signed lease or the appraiser’s market rent.
- Storefront rent usually counts at a discount — often 50%–75% of the signed lease — because commercial tenants turn over less predictably. Some programs exclude it entirely.
- Vacant storefronts count as zero. So do month-to-month handshake deals with no written lease.
That means your ratio should work on apartments alone, with the storefront as a cushion. If the building only works when the storefront is counted at full rent, the refinance is at risk.
2026 rent and value bands in Pilsen
| Building type | Typical value (2026) | Apartment rent | Storefront rent | Typical DSCR at 70–75% LTV |
|---|---|---|---|---|
| Storefront + 2 apartments, 18th St | $520K–$680K | $1,500–$1,850 per unit | $1,800–$3,000/mo | 1.00–1.15 (storefront at 75%) |
| Storefront + 3 apartments, 18th St | $640K–$820K | $1,450–$1,800 per unit | $2,000–$3,200/mo | 1.05–1.20 |
| Brick two-flat, side street | $430K–$540K | $1,650–$2,000 per unit | — | 0.98–1.12 |
| Brick three-flat, side street | $560K–$700K | $1,550–$1,900 per unit | — | 1.08–1.25 |
The side-street three-flat is the easiest DSCR file in Pilsen. The 18th Street mixed-use building has the best long-term upside but a thinner ratio once the storefront is discounted.
Jaken Finance Group Pilsen DSCR terms (2026)
- Rates: 5.75%–10.5%
- Leverage: up to 75% LTV on mixed-use cash-out; on qualifying residential two- to four-flats, up to 85% on purchase and 80% on cash-out (select markets, qualified borrowers)
- Minimum ratio: 1.0; best pricing at 1.2 and above
- Terms: 30-year fixed, with interest-only options on select files
- Borrower: LLC ownership standard; no W-2 or tax returns required
- Timeline: 10–21 business days with a complete file
Model your numbers with the DSCR calculator and compare the full city program at DSCR loans in Chicago.
Worked example: 18th Street storefront + three apartments
An investor bought a brick mixed-use building near 18th and Racine with a bridge loan, renovated the three upper units, and signed a new five-year lease with a coffee shop for the storefront.
| Line item | Amount |
|---|---|
| Appraised value after renovation | $760,000 |
| Apartment rents: $1,700 + $1,650 + $1,650 | $5,000/mo |
| Storefront lease (five-year, signed) | $2,600/mo |
| Storefront counted at 75% | $1,950/mo |
| Qualifying rent | $6,950/mo |
| DSCR loan at 72% LTV | $547,200 |
| Principal and interest at 7.75%, 30 years | ~$3,920/mo |
| Property taxes (stress-tested for reassessment) | ~$1,450/mo |
| Insurance (mixed-use policy) | ~$420/mo |
| Total monthly payment (PITI) | ~$5,790/mo |
| DSCR | ~1.20 |
| Ratio on apartments only | ~0.86 |
The ratio cleared at 1.20 with the discounted storefront rent. But the apartments-only ratio of 0.86 shows the risk: if the coffee shop leaves, the building would not cover its debt on apartment rent alone. The investor kept six months of reserves specifically for storefront turnover. That reserve is the real underwriting on a Pilsen mixed-use hold.
Storefront haircut scenarios
Lenders don’t all discount storefront rent the same way. Here is the worked example at four haircuts. The loan stays at $547,200 (72% of value), with a $3,920 principal and interest payment plus $1,870 for taxes and insurance.
| Storefront counted at | Qualifying rent | DSCR on the $547,200 loan | Largest loan at a 1.0 ratio |
|---|---|---|---|
| 100% ($2,600) | $7,600 | 1.31 | Capped by leverage at $547,200 |
| 75% ($1,950) | $6,950 | 1.20 | Capped by leverage at $547,200 |
| 50% ($1,300) | $6,300 | 1.09 | Capped by leverage at $547,200 |
| 0% (vacant) | $5,000 | 0.86 | ~$436,900 |
As long as the storefront counts for something, leverage limits the loan, not rent. At zero, the loan shrinks by about $110,300. That’s the number to plan for. Either hold that much in cash or equity, or sign a storefront lease before the refinance. Compare lender haircuts side by side in the DSCR loan comparison calculator.
What Pilsen’s anti-deconversion and demolition rules say
Two city rules protect Pilsen’s unit count. Both shape your exit.
The Multi-Unit Preservation District. Under Chicago Zoning Ordinance section 17-7-0580, parcels in the Pilsen boundary zoned RT4 or RM4.5 through RM6.5 face an extra test. The rule’s text also names business and commercial (B and C) districts inside that boundary, so check it even on a storefront lot. A new single-family home or two-flat is allowed only if more than half the lots on that side of the block already have one. Otherwise, you need a zoning change.
The demolition surcharge. Since 2024 amendments, the city charges $60,000 to demolish a house, townhouse, or two-flat in the Pilsen area. It charges $20,000 per unit for a coach house or larger building. The surcharge runs through December 31, 2029. It’s waived if at least half the replacement units are affordable to households at 60% of area median income. See the Department of Housing’s demolition surcharge page for the map and forms.
For a DSCR holder, these rules cut both ways. They protect the rental units that produce your rent. But they also shrink the pool of buyers who planned to convert to single-family. Price and appraise Pilsen buildings on income, not on conversion upside.
Commercial lease terms that help the refinance
A storefront lease counts for more when it reads like a lender wrote it:
- A real term. Several years left, with renewal options, beats a one-year lease.
- Clear expense terms. State who pays utilities, repairs, and any share of taxes or insurance.
- A tenant estoppel. A signed letter from the tenant confirming rent, deposit, and no defaults.
- A legal use. The business must fit the zoning and your insurance. Restaurants need proper hoods and fire suppression.
- A plan for vacancy. Chicago requires owners to register a storefront that has been vacant more than 30 days, and to renew every six months.
Pilsen-specific risks for DSCR holds
Deconversion and demolition rules. Chicago adopted rules intended to slow the loss of two- to four-flats in Pilsen, including limits on deconversion and a demolition surcharge. Confirm current requirements with the City of Chicago Department of Buildings before any plan that changes unit count.
Property taxes. Pilsen assessments have climbed as values rose. Mixed-use buildings are assessed differently from pure residential. Pull the current bill and assessment from the Cook County Assessor and stress it upward before you apply.
Commercial lease quality. Lenders want a written lease with a real term, rent, and responsibilities. A five-year lease with a tenant that has operated for years is worth more than a new tenant on a one-year lease.
RLTO on apartments. The Chicago RLTO governs the residential units. Budget for deposit handling, heat obligations, and longer turnover timelines.
Insurance. Mixed-use policies cost more than residential. Restaurants with cooking equipment cost the most. Get a quote early.
Lease and document checklist
- Signed leases for every apartment, plus the storefront lease
- Rent roll showing deposits and move-in dates
- Current tax bill and a reassessment estimate
- Mixed-use insurance quote
- Certificate of occupancy or permit sign-offs for renovated units
- LLC documents and operating agreement
- Bridge loan payoff letter if refinancing
Related Chicago DSCR pages
- Hard money loans in Pilsen for acquisition and rehab
- DSCR loans for Chicago multi-family
- Bridge loans for Chicago mixed-use
- Chicago BRRRR strategy guide
When the storefront is vacant at refinance
It happens: the bridge loan is maturing, the apartments are leased, and the storefront is still empty. Your options:
- Refinance on apartments only. If apartment rent alone supports a 1.0 ratio at lower leverage, you can close now and add the storefront rent later.
- Extend the bridge loan. Buy time to lease the storefront. This costs interest and fees but may produce a larger permanent loan.
- Bring cash to lower the loan. A smaller DSCR loan may clear on apartment rent alone.
- Sign a short-term tenant. Some lenders will count a written lease even if it’s a shorter term. Confirm before you sign.
Plan for this scenario before you buy. On 18th Street, a storefront vacancy of six months or more is common after a long-time tenant leaves.
Frequently asked questions
Does storefront rent count toward DSCR on a Pilsen mixed-use building?
Usually, but at a discount. Many DSCR programs count a signed commercial lease at a haircut, often 50%–75% of face rent, and some count only the apartments. A vacant storefront typically counts as zero. Plan your ratio on apartment rent first.
What mix of commercial and residential space qualifies for a DSCR loan?
Most residential DSCR programs want the building to be mostly residential by square footage — commonly more than half. A classic 18th Street building with one storefront and two or three apartments above usually qualifies. A building with two storefronts and one apartment may need a commercial loan instead.
Can I convert a Pilsen two-flat into a single-family home?
Be careful. Chicago adopted rules aimed at slowing deconversions and demolitions in Pilsen. Check current city requirements before you plan to remove units. For a DSCR hold, keeping the units usually produces the better ratio anyway.
What rates do Pilsen DSCR loans carry?
Jaken Finance Group DSCR loans run 5.75%–10.5%. Mixed-use files and ratios near 1.0 price toward the higher end. Fully residential two- and three-flats with ratios above 1.2 price lower.
Refinancing a Pilsen mixed-use building? Pre-qualify for a DSCR loan or call (833) 264-7776. See all city options on hard money lenders in Chicago.