Financing Home Purchase With Illegal Apartment In Chicago


Qualifying For Home Purchase With Illegal Apartment

This BLOG On Home Purchase With Illegal Apartment In Chicago Was Written By Gustan Cho NMLS 873293

There are many homes, especially in Chicago, where there is an illegal basement apartment or illegal attic apartment.

  • In Chicago and surrounding suburbs, it is not uncommon where a homeowner of a two to four unit property has converted the basement into an illegal basement apartment with a bedroom, bathroom, and functional kitchen. 
  • Homeowners will illegal basement apartments do not just use it as an in-law suite but rent them out to tenants. 
  • The city of Chicago Building Department is well aware of this and building inspectors just let these homeowners slide. 
  • There are basement apartments that have been grandfathered in and is considered legal, however, a large percentage of basement apartments are not legal but homeowners continue to rent them out for rental income.

Can I Get A Mortgage On Home Purchase With An Illegal Apartment In Chicago?

All mortgage lenders will require a home appraisal on the subject property. 

  • The home appraiser will note the legality of the basement apartment and note that the basement apartment is illegal. 
  • Mortgage lenders do want to see proper building permits and check with the county records with regards to square footage when it comes to discrepancies on the appraisal report. 
  • If there was a room addition added on the home, whether it is on the ground floor or whether it is a second floor addition, the square footage on the appraisal report needs to match those recorded on county or city records. 
  • Basements are exceptions. 
  • Basements is not considered as part of living square footage so they are exempt with square footage verification. 
  • Most mortgage lenders are aware of illegal basement apartments and will let that slide. 
  • If you get a mortgage lender that will give you a hard time in a home purchase with illegal apartment, you may have to disconnect the kitchen gas and electric.

Rental Income Cannot Be Used On Home Purchase With Illegal Apartment

On home purchase with illegal apartment, the rental or potential income cannot be used.

  • Home purchase with Illegal apartment will only be considered as a furnished basement and not an income producing basement apartment.  Home buyers of 2 to 4 unit properties with an illegal basement apartment should not be concerned when it comes to financing it. 
  • Most mortgage lenders who originate and fund loans in Chicago and surrounding suburbs in Chicago do understand and know about illegal basement apartments. 
  • If your mortgage lender is giving you a hard time on the illegal basement apartment, please contact me at or call me at 262-716-8151 and I can help you.

Related> 2 to 4 unit mortgage loans

Related> 2 to 4 unit properties

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