What a lender actually measures
Your budget comes down to one ratio. The CFPB defines debt-to-income, or DTI, as all your monthly debt payments divided by your gross monthly income. Source: CFPB.
On a conventional loan, Fannie Mae sets the ceiling. A loan approved through its automated system, Desktop Underwriter, can go up to a 50% total DTI. A manually underwritten loan stops at 36%, or 45% if you meet the credit score and reserve requirements in Fannie Mae's eligibility matrix. Source: Fannie Mae Selling Guide B3-6-02.
The housing part of that ratio covers more than principal and interest. Fannie Mae's monthly housing expense, which it calls PITIA, adds up (Source: Fannie Mae Selling Guide B3-6-03):
- principal and interest
- property, flood and mortgage insurance premiums, where they apply
- real estate taxes
- special assessments
- owners' association dues
- payments on any second mortgage on the home
Your other debts go on top: car payments, student loans, minimum credit card payments, leases, child support. All of it gets divided by the same gross income.
That's why two buyers with the same salary and the same car loan can qualify for very different prices. Usually what separates them is taxes and HOA dues, and around Chicago the taxes vary a lot from one town to the next.
How a Cook County tax bill is built
The Cook County Clerk spells out the residential formula in its 2025 Tax Rate Report. Source: Cook County Clerk, 2025 Tax Rate Report.
- Start with the Assessor's market value for the home.
- Take 10% of it. That is the residential assessment level.
- Multiply by the state equalization factor, which is 3.0300 for tax year 2025.
- Subtract exemptions. The homeowner exemption takes $10,000 off the equalized value.
- Multiply by the composite tax rate for that property.
The composite rate is the total of every taxing body that bills the property. That means the city or village plus the school districts, park district, library, county, forest preserve and water reclamation district. Two houses a few blocks apart can carry different rates if they fall in different school or park districts.
The Clerk runs a sample: a Chicago home with a $250,000 market value has an estimated 2025 tax bill of $4,505.95 after the homeowner exemption.
Same price, different tax bill
These are average composite rates for tax year 2025 from the same Clerk report. The Clerk notes that rates for individual properties within a town can be higher or lower than its average.
| Area | 2025 average composite rate |
|---|---|
| Wilmette (smallest suburban average in the county) | 6.356580% |
| City of Chicago (general rate) | 6.853152% |
| Evanston | 7.368952% |
| Park Ridge | 8.259735% |
| Arlington Heights | 8.338899% |
| River Forest | 9.826847% |
| Oak Park | 11.664639% |
| Berwyn | 11.849372% |
Take two homes with the same Assessor value, one in Chicago and one in Oak Park, and run the Clerk's formula on both. The Oak Park bill comes out about 70% higher. All of that difference lands in the housing line of your DTI, so the price you qualify for drops. Lots of buyers still choose Oak Park for what those taxes pay for. They just do better when they budget for it from the first showing. Our Oak Park and River Forest market report has more on buying there.
Rates move every year, and a lower rate doesn't always mean a smaller bill. The North and Northwest suburbs were reassessed for tax year 2025. In the Clerk's sample for that region, the average rate fell from 9.180% to 7.996%, while assessed values rose 23.60% and the sample bill went up 10.55%.
Look at the rate for the town, then the tax history for the actual address. A listing that looks like a stretch in one suburb can fit fine at the same price across the border.
Why the tax number on a listing can mislead you
The tax figure on a listing is usually the seller's most recent bill, and it reflects the seller's exemptions. Exemptions belong to the owner who lives in the home. Most owner-occupants qualify for the homeowner exemption, and owners 65 and older can add a senior exemption. Source: Cook County Assessor, Exemptions. If the seller has a senior exemption and you don't qualify for one, your bill will run higher than theirs.
The homeowner exemption doesn't just appear for you either. The Assessor says that if you have never received it on your home, you file an initial application. After that it renews automatically while you live there. Source: Cook County Assessor, Homeowner Exemption.
Be careful with new construction and gut rehabs too. The last bill may reflect the property before the work was done. Ask your attorney how the new value is likely to be set before you lean on that number.
When we pre-approve you, we qualify you with a tax figure for the address you're buying. You can look up a property's tax bills by address or PIN on the Cook County Treasurer's site before you tour.
Condos: dues and special assessments count in full
For a Chicago condo, the monthly assessment goes into your housing expense, and Fannie Mae puts special assessments on the same line. A two-bedroom with low taxes and high dues can qualify the same as one with high taxes and low dues. Compare the total of the two. A building with a special assessment on the books takes a bite out of your budget too, so ask about one before you write the offer. Our Chicago condo financing guide covers the rest of what lenders check on a building.
A practical way to set your number
- Name the neighborhoods or towns you'd really live in, and look up each one's composite rate in the Clerk's report.
- Pull the tax history for a few real listings in each area, so you have actual bills to compare.
- List your monthly debts as they show on your credit report. Memory tends to round down.
- If you might use down payment help, check the programs before you settle on a budget. Our guide to first-time buyer programs in Chicago lists what each one pays and who qualifies.
- Get pre-approved at the price and in the town you're targeting, with real tax and HOA numbers in the file.
Your approval amount is the most a lender will let you borrow. The amount you'll be comfortable with is yours to decide, after commuting, childcare and saving. We'll show you both, and we'll tell you when a house at the top of your approval would leave things tight.
Get a budget built on real tax numbers.
15-minute conversation. Tell us the neighborhoods or towns you're looking at, and we'll show you how taxes and dues change your number in each one. No SSN, no impact to credit.
Schedule a CallCommon questions about what you can afford
How much of my income can go to a mortgage in Illinois?
Illinois doesn't set its own cap. For a conventional loan, Fannie Mae allows a total debt-to-income ratio up to 50% on loans approved through Desktop Underwriter. On a manually underwritten loan the limit is 36%, or up to 45% with the credit score and reserves Fannie Mae requires. The total includes your housing payment and your other monthly debts.
What is the property tax rate in Chicago?
The Cook County Clerk puts the City of Chicago's general composite tax rate at 6.853152% for tax year 2025. That rate is applied to equalized assessed value: 10% of the Assessor's market value, times the 3.0300 state equalization factor, minus exemptions.
Are suburban Cook County property taxes higher than Chicago's?
Often, though not everywhere. The Clerk's 2025 averages put Oak Park at 11.664639% and Berwyn at 11.849372%, against 6.853152% for Chicago. Wilmette averaged 6.356580%, the smallest suburban average in the county.
Do HOA dues count against what I can borrow?
Yes. Fannie Mae counts owners' association dues and special assessments in your monthly housing expense, so both go into your debt-to-income ratio.
Do I get the seller's property tax exemptions?
Exemptions belong to the owner who lives in the home. The Cook County Assessor says that if you have never received the homeowner exemption on your home, you file an initial application. After that it renews automatically as long as you keep living there.