Chicago is not a sprawl market. New construction here means an infill lot in Bridgeport, a teardown three-flat in West Ridge, or a coach house where zoning allows. It does not mean a greenfield street with eight new lots. If you still do not know whether you need a spec loan, a land bridge, or a small-plat facility, start at new construction loans for investors.
Use this Chicago page to pick the product. Permit-fee tables, FAR math, and GC license classes live on spec home construction loans Illinois. Collar plats and builder takedowns live on Will, Kane, and McHenry small-plat financing. Luxury Naperville specs have their own page.
Jaken Finance Group prices qualified construction files at 8.99%–13.5% interest-only. Draws follow Chicago Department of Buildings inspections. Close targets 10–14 business days when the package is complete.
Pick the Chicago construction path
| What you actually have | Facility | Next page |
|---|---|---|
| Teardown or vacant infill, 2–4 units, city lot | Construction with DOB draws | Stay here, then Illinois spec |
| Rear coach house or basement ADU | Construction or a smaller second | ADU zoning · coach-house financing |
| North-side or inner-collar teardown economics | Dual-exit teardown model | Infill teardown economics |
| Naperville or Hinsdale custom spec | Luxury vertical | Luxury new construction Naperville |
| Four to twenty lots in Will, Kane, or McHenry | Land, plat, streets, takedowns | Collar small-plat guide |
| Unplatted acreage with no recorded lots | Land bridge, not a house loan | Vacant land loans · subdivision financing |
If two rows both feel true, pick the earlier phase. We can sequence later. We cannot treat a Will County sketch plat as a Chicago three-flat.
What gets built (and funded) in 2026
Teardown to three-flat is the common city file where land value exceeds rehab economics on existing brick. Two-flat plus rear ADU shows up where Affordable Requirements Ordinance rules and ADU pathways intersect. Confirm zoning before you option the lot. Single-family custom is less common inside city limits. Collar counties see more horizontal product. That horizontal product is not this page.
Construction loan structure
| Item | Range |
|---|---|
| Rate | 8.99%–13.5% interest-only during build |
| LTC | Up to 100% on qualified files (land + vertical) |
| As-completed cap | We fund the lower of LTC and 75% LTARV |
| Term | 12–18 months + extension options |
| Draws | Foundation, framing, MEP rough, drywall, CO |
| GC requirement | Licensed, insured, resume of Chicago work |
| Close | 10–14 business days with complete diligence |
| DSCR takeout | 5.75%–10.5% at 1.0+ DSCR, 70%–75% LTV |
Permits and politics — budget real time
Chicago Department of Buildings inspections can add 4–8 weeks to a naive timeline. Funded draws align to foundation sign-off, structural and framing, rough mechanicals, drywall and finish, then certificate of occupancy. Investors who treat Chicago like a Texas subdivision schedule get crushed on carry. For fee calculators, Self-Certification, and GC class tables, use the Illinois spec construction guide.
Worked scenario: South Shore infill duplex
Lot acquisition $95,000 plus vertical $285,000 for a modern two-unit (each 1,100 sf). Soft costs and interest reserve add about $48,000. Total project cost is about $428,000. One unit presold at $310,000 prior to CO.
As-completed value on the pair is about $575,000. Seventy-five percent of that is $431,000. One hundred percent of cost is $428,000. We fund the lower number. On this file LTC and LTARV almost tie, so the advance can sit near $428,000 on a qualified borrower. Interest at 11.5% IO on an average drawn balance near $280,000 for 11 months is about $29,500. Exit is a unit sale plus DSCR on the retained unit at 70%–75% LTV, not 85%.
If the second unit does not lease, the DSCR takeout shrinks. Pre-lease or presale is not a marketing preference. It is how the construction balance gets paid down at CO.
Chicago zoning realities for builders
Confirm RS-3 / RT-4 before you close. Those districts are common for two-flat and three-flat entitlements. Affordable Requirements Ordinance may apply on larger developments. Legal review is required. Rear coach houses and basement units have expanded pathways in select wards. See the ADU guide. Orange-rated structures can trigger a 90-day demolition delay. Budget that carry. Unlike collar-county plats, Chicago vertical construction also faces aldermanic scrutiny. Community meetings add calendar risk.
Two-flat teardown economics (2026)
When land exceeds rehab value, teardown-rebuild wins.
| Item | Example (Northwest side) |
|---|---|
| Land / teardown | $180,000 |
| Vertical (new 3-flat) | $520,000 |
| Total | $700,000 |
| Stabilized value | $950,000–$1.05M |
| Per-door rent (new) | $1,800–$2,100 |
Construction loan at 100% LTC on qualified files keeps equity demand down. Presale or pre-lease one unit before CO to satisfy the exit lender. Dual-exit math for north-side teardowns is unpacked in the 2026 infill teardown article.
Winter build schedule — non-negotiable in Chicago
Concrete pours below 40°F need blankets and additives. Roofing slows in November. Pour foundations by mid-October or wait until April. Order long-lead mechanicals in the framing phase. Build a 2-month weather contingency into the interest reserve.
Why Jaken Finance Group for Chicago construction
We are headquartered in Hoffman Estates with Chicago metro deal flow daily. Draw inspectors understand the Chicago DOB sign-off sequence. They do not use a generic national checklist.
Comparison: Chicago infill vs. Will County horizontal
| Chicago infill 3-flat | Will / Kane / McHenry plat | |
|---|---|---|
| Permits | DOB, slower | Municipal plat plus building dept, faster vertical |
| Product | Vertical rental | SFR lots, then houses or builder takedowns |
| RLTO | Yes if Chicago | No |
| Front-loaded fees | Formula permit, no land-cash | Impact, land-cash, and road fees per lot |
| Exit | DSCR per door | Lot sale, spec sale, or DSCR on new SFR |
Many investors build new in Will or Joliet and rehab brick in Chicago. We fund both. Do not send a plat file to the Will County fix-and-flip page. That page is existing-stock rehab.
GC selection in Chicago — lender perspective
We look for Chicago DOB permit history, not only suburban tract work. The GC must be bonded and insured at limits matching project size. We want references on 2–4 unit vertical, not only SFR. Subcontractor bids should be transparent. Post-close change orders need approval. The cheapest GC is rarely the fastest to CO. Carry kills deals more than bid spread.
Environmental and soil surprises
Infill lots may hide an underground tank or fill soil. Order a Phase I on commercial-adjacent lots. Order soil borings on vacant land before you close. Construction lenders do not fund remediation surprises mid-build.
Demolition delay is its own loan calendar
A Chicago wrecking permit is not a line item you pay at the first vertical draw. It is a separate DOB workflow. Utilities must disconnect. Cook County records the demolition before the new-construction permit issues. Orange-rated structures can add a 90-day hold. That is dead carry on land you already closed.
Sequence the file so demolition and site clearing are funded before the construction facility converts to vertical draws. Confirm gas and water disconnect dates with the city before you wire land money. A stalled disconnect can idle a lot for a month in January. Interest still accrues.
Aldermanic review is not a permit fee
Chicago infill sits in a ward. Community meetings and aldermanic questions add weeks that do not appear on the DOB fee calculator. A two-flat that is by-right on paper can still wait on a meeting about parking, height, or a coach house. Budget that calendar in the interest reserve. Do not treat a “by-right” zoning letter as a start date.
Affordable Requirements Ordinance rules can attach on larger unit counts. A two-unit or three-flat infill often stays under the trigger. A larger assemblage may not. Get legal review before you option a lot that you plan to combine.
RLTO if you hold the new building
A new three-flat inside Chicago is still a Chicago rental if you keep it. RLTO covers deposits, heat, and renewals. Collar-county DSCR math that ignores RLTO overstates NOI. If the exit is a sale to an owner-occupant buyer, RLTO is not the operating problem. If the exit is DSCR, model city landlord rules in the expense line.
Cook County transfer tax and Chicago real estate transfer tax also hit a sale. An 8% all-in sale-cost assumption is a planning band, not a closing statement. Run the actual stamps on your PIN.
Coach houses are a second dwelling, not a finish upgrade
Chicago’s ADU expansion makes rear coach houses and basement units a real second rent stream on many RT lots. That is construction, but the overlay is the risk. Do not hide an ADU inside a “spec SFR” label if the city treats it as a second dwelling. Read ADU zoning and coach-house financing before you draw a rear structure on the site plan.
A basement conversion without a legal CO does not count as DSCR income. Separate entrance, egress, and a meter path belong in the permit set, not in a punch list after framing.
What Chicago construction files must show
Stamped plans. A Chicago-licensed GC whose class matches project value. A line-item budget with 10%–15% contingency. As-completed comps from the same product, not a North Shore custom. A written exit: unit sale, building sale, or DSCR hold. An interest reserve that covers winter and DOB slip, not a six-month flip reserve on a fourteen-month build.
We pass files that use in-town house comps to value a lot that still has an orange-rated building on it. We pass GCs with only suburban tract resumes on a three-flat vertical. We pass budgets with no demolition line and no weather contingency.
Water, frost, and radon are city cost lines
Chicago prices building permits by square footage, not by a cheap “base minimum” that circulates online. The Illinois spec page has the calculator and the $2,350 residential floor. This page’s point is simpler. Run the calculator on your square footage before you lock land.
Water service is a separate permit. Frost footings sit 42 inches below grade. New residential construction needs radon-resistant rough-in under Illinois law. Those three items do not appear in a Texas subdivision budget. They belong in yours.
Education links
- Illinois spec home construction loans — DOB fees, FAR, GC classes
- New construction loans for investors — pick spec, land, or plat
- Will, Kane, McHenry small-plat financing
- Subdivision development guide · subdivision financing
- Two-flat vs three-flat financing
- ADU zoning Chicago
- Condo deconversion financing
- Chicago infill teardown economics
- Hard money hub
FAQ
Do you fund condo deconversion construction?
Case-by-case. Legal and HOA complexity require upfront review.
Is modular construction eligible?
Yes with approved manufacturers and a documented Chicago inspection path.
Do you fund Chicago ADU-only projects?
Rear ADU and basement conversion loans are smaller checks. They often fit HELOC or second-position stacks. Ground-up ADU with full permits may qualify if bundled with primary unit renovation.
Cost per square foot reality (2026 Chicago)
| Build type | All-in $/sf (vertical) |
|---|---|
| Standard 2-flat renovation | $120–$180/sf |
| New vertical 3-flat | $200–$280/sf |
| High-spec Lincoln-adjacent | $300+/sf |
Material and labor inflation stabilized. Skilled trades remain tight. Lock GC pricing before you close land.
Interest reserve and carry
On a $700K construction loan at 11.5% IO, monthly interest is about $6,700. A 14-month build plus lease is about $94K of interest reserve. Sponsors who under-reserve get squeezed at month ten. We stress-test reserves in underwriting so you finish the building, not fire-sale the half-built frame.
Discuss your Chicago ground-up project · (833) 264-7776
Chicago new construction — draw and carry file gates (2026)
Chicago construction files fail when DOB inspection cadence adds 4–8 weeks unmodeled, or $94K interest reserve on a $700K loan is omitted from the pro forma.
- Worked file: Lot $95K + vertical $285K two-unit — presold unit $310K prior to CO
- New 3-flat band: Land $180K + vertical $520K → stabilized $950K–$1.05M · $1,800–$2,100/door
- Carry: $700K at 11.5% IO — 14-month build + lease ≈ $94K interest reserve
- Cost/sf: New vertical $200–$280/sf · high-spec Lincoln-adjacent $300+/sf
Underwriting anchor: Worked file: Lot $95K + vertical $285K two-unit — presold unit $310K prior to CO — replay corridor-specific carry and exit math from this page before locking bridge, flip, or DSCR term. Construction 100% LTC on qualified file · DSCR on retained unit · (833) 264-7776.