Last reviewed: November 4, 2026 · Chicago Condo Loans Editorial Team · How we research
Quick answer To buy a Chicago condo as a rental with a conventional loan sold to Fannie Mae, you generally need at least 15% down (an 85% maximum loan-to-value on a one-unit purchase). A second home needs at least 10% down (90%). FHA and VA loans are for homes you will live in, so they are not options for a rental or a second home. Expect the lender to require cash reserves (six months of payments for an investment property and two months for a second home under Fannie Mae’s automated underwriting), and expect higher pricing: Fannie Mae charges loan-level price adjustments for investment and second-home loans on top of its condo adjustment. The building still has to pass the lender’s condo project review. In 2026 Fannie Mae dropped its 50% owner-occupancy test for investor loans in established buildings, but condo-hotels and buildings with mandatory rental pools remain ineligible.
This guide is part of our complete guide to Chicago condo loans. If you will live in the unit, see condo down payment and PMI in Chicago instead.
Which loans can finance a Chicago investment or second-home condo?
Occupancy is the first question a lender asks, because it decides which loan programs are open to you. You state how you will use the property on the loan application, and misstating it can be treated as mortgage fraud.
| Loan type | Primary residence | Second home | Investment (rental) |
|---|---|---|---|
| Conventional (Fannie Mae) | Yes, up to 97% LTV | Yes, up to 90% LTV | Yes, up to 85% LTV |
| FHA | Yes (you must move in within 60 days and intend to stay at least a year) | Generally no; FHA is built for principal residences | No |
| VA | Yes (you must live in the home) | No | No |
| Jumbo (above $832,750 in 2026) | Lender-set | Lender-set | Lender-set |
| Portfolio and non-QM | Lender-set | Lender-set | Lender-set; often used for non-warrantable buildings |
Some non-QM lenders offer investor loans that qualify you on the unit’s expected rent rather than your personal income. Terms, down payments and rates for these are set by each lender, so we don’t quote figures. If the building is non-warrantable, a portfolio or non-QM loan may be the only route; see warrantable vs. non-warrantable condos.
How much do you need down for an investment or second-home condo?
Fannie Mae’s Eligibility Matrix (dated August 5, 2026) sets these maximum loan-to-value ratios for one-unit properties, which include condo units, on fixed-rate loans run through Desktop Underwriter:
| Occupancy | Purchase | Limited cash-out refinance | Cash-out refinance |
|---|---|---|---|
| Second home | 90% (10% down) | 90% | 75% |
| Investment property | 85% (15% down) | 75% | 75% |
Three things can push the real minimum higher. The matrix says lower LTVs may be required depending on the type of condo project review the lender performs. A loan above $832,750, the 2026 conforming limit for Cook County, is a jumbo loan with lender-set terms (see jumbo condo loans and high-rise condos). And a bigger down payment lowers the pricing adjustments described below, so many investors put down more than the minimum.
What counts as a second home instead of an investment property?
Fannie Mae’s occupancy rules (B2-1.1-01) define a second home as a one-unit property that:
- you occupy for some portion of the year
- is suitable for year-round occupancy
- you have exclusive control over
- is not a rental property or a timeshare, and
- is not subject to any agreement that gives a management firm control over its occupancy.
A pied-à-terre in the Loop or Streeterville for someone whose main home is elsewhere can fit that definition. A unit you plan to rent out most of the year does not; it is an investment property, defined simply as one you own but don’t occupy. If a second home earns some rental income, the loan can still be a second-home loan, but that income can’t be used to help you qualify.
How much cash will the lender want in reserve?
Reserves are savings left after closing, measured in months of the new payment (principal, interest, taxes, insurance and HOA dues). Fannie Mae’s minimum reserve rules (B3-4.1-01) for loans run through Desktop Underwriter:
| Situation | Minimum reserves |
|---|---|
| One-unit principal residence | No set minimum (DU decides) |
| Second home | 2 months |
| Investment property | 6 months |
| You own other financed properties (1 to 4) | Plus 2% of their combined unpaid balances |
| You own other financed properties (5 to 6) | Plus 4% of their combined unpaid balances |
| You own other financed properties (7 to 10, DU only) | Plus 6% of their combined unpaid balances |
Why do investor and second-home condo loans cost more?
Fannie Mae charges loan-level price adjustments (LLPAs), one-time fees stated as a percentage of the loan amount that lenders usually pass on through a higher rate or points. Its LLPA Matrix (dated September 9, 2026) lists identical adjustments for investment properties and second homes, and a separate condo adjustment. On a condo purchase they stack:
| LTV | Investment or second home | Condo | Combined |
|---|---|---|---|
| 60% or less | 1.125% | 0.000% | 1.125% |
| 60.01% to 70% | 1.625% | 0.125% | 1.750% |
| 70.01% to 75% | 2.125% | 0.125% | 2.250% |
| 75.01% to 80% | 3.375% | 0.750% | 4.125% |
| 80.01% to 85% | 4.125% | 0.750% | 4.875% |
| 85.01% to 90% (second home only) | 4.125% | 0.750% | 4.875% |
For example, a $300,000 loan on an investment condo at 80% LTV carries 4.125% in these two adjustments alone, or $12,375, before any credit-score adjustment. Putting 25% down instead moves the loan into the 70.01% to 75% band, where the combined figure is 2.250%. These are Fannie Mae’s charges to the lender; the rate or points you are quoted depend on how your lender prices them.
Can rental income help you qualify for a Chicago condo loan?
For an investment unit, yes, within limits. Under Fannie Mae’s rental income rules for the subject property (B3-3.8-02, updated September 2, 2026), the lender takes the gross monthly rent from a lease or from the appraiser’s comparable rent schedule (Form 1007), multiplies it by 75%, and subtracts the unit’s full monthly payment. What happens next depends on your experience as a landlord:
- 12 months or more of property management experience: a positive result can be counted as income.
- Less than 12 months: the rent can only offset the unit’s own payment; it can’t add to your income.
- Either way: a negative result counts as a debt, and the lender must document your current housing payment to use any rent from the unit.
Rent from a second home or from the home you live in generally can’t be used to qualify. Fannie Mae reorganized its rental income rules in September 2026, including new requirements for short-term rental income and for investment properties bought within 45 days of the property being financed. Lenders must apply the new rules to applications dated December 1, 2026 or later and may apply them sooner (Selling Guide Announcement SEL-2026-08), so ask your lender which version it is using.
Does the building matter more when you are buying to rent?
The building has to pass the same condo project review as for any conventional loan: reserves, delinquencies, litigation, commercial space, insurance and single-owner limits. The condo questionnaire is where the lender checks these. A few points matter more to investors:
- Renter-heavy buildings are no longer automatically out. Fannie Mae retired its 50% owner-occupancy test for investment-property loans in established projects in Lender Letter LL-2026-03 (Mar. 18, 2026); new and newly converted projects still have presale requirements. The same letter ended the Limited Review shortcut for applications on or after August 3, 2026 (what the August 3 change means).
- Condo-hotels are ineligible. Fannie Mae won’t buy loans in projects with hotel-style operations, mandatory rental pools or shared rental profits. Our high-rise guide lists the warning signs.
- Resale to FHA buyers. FHA project approval generally needs at least 50% owner occupancy in an established building (30% for new construction or gut rehabs, 75% for two- to four-unit projects, per HUD), so a building dominated by renters may not qualify, which narrows the pool of buyers when you sell. See FHA condo approval in Chicago.
- Leasing rules. Read the declaration and rules for rental caps, minimum lease terms or waiting periods before you commit. Under Section 18(n) of the Illinois Condominium Property Act, the building’s rules on the use of units and common elements apply to tenants, and an owner who leases must give the board a copy of the signed lease by the date of occupancy or within 10 days of signing, whichever comes first.
- Reserves are rising. From January 4, 2027, Fannie Mae and Freddie Mac expect full-review project budgets to allocate at least 15% to reserves (what the 15% rule means), which may push up assessments in underfunded buildings.
Can you rent a Chicago condo on Airbnb or another short-term platform?
Sometimes, but the city, the building and the lender all get a say. Under Chicago’s shared housing rules, a unit in a building of five or more units does not have to be the host’s primary residence, while a unit in a building of two to four units does. In a five-plus unit building, the city also caps shared-housing rentals at one-quarter of the units or six units, whichever is less; a two- to four-unit building can have one. In every case the unit can’t be listed if the building is on the city’s House Share Prohibited Buildings List, if the association’s rules or your lease prohibit short-term rentals, or if it is in a Restricted Residential Zone. Association rules can ban short-term rentals even where the city allows them, so check the declaration and the Prohibited Buildings List before you count on that income.
If you finance the unit as a second home, it can’t be a rental property or be under a management company’s control, so a unit bought mainly for short-term rental is normally an investment property for loan purposes.
How do property taxes differ for a Chicago investment condo?
Cook County’s Homeowner Exemption lowers a property’s equalized assessed value by $10,000, but only for a home you occupy as your principal residence. A rental unit or second home won’t get it, so its tax bill can be noticeably higher than the seller’s if the seller lived there. Lenders count the full tax in your monthly payment, so estimate the bill without the exemption.
Step by step: financing a Chicago condo you won’t live in
- Decide honestly whether the unit is a second home or an investment property; it sets your down payment, pricing and loan options.
- Ask the listing agent early for the building’s warrantability history, leasing rules, short-term rental policy and any special assessments.
- Get quotes at more than one LTV (for example 75% and 80%) to see how the pricing adjustments change your rate or points.
- Line up reserves: six months of the new payment for an investment unit or two for a second home, plus 2% to 6% of the balances on other financed properties.
- If you’ll use rent to qualify, have a lease or expect the appraiser’s rent schedule, and be ready to document your landlord experience and current housing payment.
- Budget for the full property tax without the Homeowner Exemption, and for landlord insurance and HOA dues.
Frequently asked questions
What is the minimum down payment for an investment condo in Chicago?
For a conventional loan sold to Fannie Mae, 15% on a one-unit purchase (an 85% maximum loan-to-value, fixed-rate, Desktop Underwriter, per the August 5, 2026 Eligibility Matrix). Lower LTVs may apply depending on the condo project review, and jumbo, portfolio and non-QM lenders set their own minimums.
How much do I need down for a second-home condo?
Fannie Mae allows up to 90% loan-to-value on a one-unit second-home purchase, so at least 10% down. The unit must be one you occupy part of the year, under your exclusive control, and not a rental or subject to a management firm’s control.
Can I use an FHA or VA loan to buy a Chicago condo to rent out?
No. FHA requires at least one borrower to move in within 60 days and intend to live there for at least a year, and VA loans are for homes the veteran will live in. Both are for primary residences.
Can I count future rent to qualify for an investment condo loan?
Usually yes for an investment property. Under Fannie Mae’s rules the lender uses 75% of the gross rent from a lease or the appraiser’s rent schedule and subtracts the unit’s payment. With less than 12 months of property management experience, the rent can only offset the unit’s own payment. Rent from a second home can’t be used.
Does a building with many renters make a condo non-warrantable?
Not for that reason alone under Fannie Mae’s rules, which retired its 50% owner-occupancy test for investment-property loans in established projects in 2026 (Lender Letter LL-2026-03, Mar. 18, 2026). New and newly converted projects still have presale requirements, the building must still meet the other project standards, and buildings run like hotels or with mandatory rental pools remain ineligible. FHA is stricter: project approval generally needs at least 50% owner occupancy in an established building (30% for new construction or gut rehabs, 75% for two- to four-unit projects), per HUD.
How many months of reserves do I need for an investment condo?
Fannie Mae’s automated underwriting requires at least six months of the new payment for an investment property and two months for a second home, plus 2% to 6% of the combined unpaid balances on other financed properties you own, depending on how many there are.
Sources
- Fannie Mae Eligibility Matrix (August 5, 2026)
- Fannie Mae Loan-Level Price Adjustment Matrix (September 9, 2026)
- Fannie Mae Selling Guide B2-1.1-01, Occupancy Types
- Fannie Mae Selling Guide B3-4.1-01, Minimum Reserve Requirements
- Fannie Mae Selling Guide B3-3.8-02, Rental Income from the Subject Property
- Fannie Mae Selling Guide Announcement SEL-2026-08
- Fannie Mae Lender Letter LL-2026-03
- Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects
- HUD Handbook 4000.1, FHA Single Family Housing Policy
- VA: Purchase loan
- Illinois Condominium Property Act, 765 ILCS 605/18
- City of Chicago: Shared housing registration eligibility
- City of Chicago: House Share Prohibited Buildings List
- Cook County Assessor: Homeowner Exemption
This guide is educational and is not lending, legal, or financial advice. Chicago Condo Loans is not a lender or broker. Rules and pricing change and every building and borrower is different, so confirm details with a licensed mortgage professional and an Illinois attorney. See our Disclaimer.