Buying a Condo in New Construction: What to Know Before You Sign in Chicago

New construction condo sales in Chicago follow a sequence that is almost nothing like buying a resale unit. Instead of making an offer on an existing home and closing within 30 to 60 days, you are typically entering a multi-phase sales process that can stretch 12 to 36 months from reservation to the day you get your keys.

Chicago has seen a steady pipeline of new condo towers and mid-rise developments in neighborhoods like the West Loop, Fulton Market, River North, Streeterville, and the South Loop. Many of these projects open sales before construction even breaks ground, which is called pre-sale or pre-construction. Understanding how that process works is the first step in buying a condo in new construction and knowing what to expect.

The Pre-Sale and Reservation Process

Most Chicago developers open a sales center or a model unit well before the building is ready. You will typically be asked to pay a reservation deposit, often between $5,000 and $10,000, to hold a specific unit while the developer prepares the full purchase contract. This reservation deposit is usually refundable at that early stage, but once you sign the actual purchase agreement, the terms change significantly.

Developers release units in phases, and the earliest buyers often get the widest selection of floor plans and sometimes the lowest pricing in the building. Later phases tend to carry higher prices as the project gains momentum and fewer units remain. If you are eyeing a specific floor or view corridor, such as a high-floor unit facing Lake Michigan in Streeterville or a terrace unit in a West Loop mid-rise, moving early in the sales cycle matters.

How Developer Contracts Differ From Standard Purchase Agreements

Developer contracts are not the standard Illinois Residential Real Estate Purchase Agreement you would use in a resale transaction. They are written by the developer's attorneys and are designed to protect the developer. Clauses that would be negotiated out of a resale contract, such as the developer's right to change unit specifications, modify common area plans, or extend the closing date by 12 months or more, are standard in new construction agreements.

Before you sign anything, have a real estate attorney review the contract. Illinois law gives buyers of new construction condos a five-business-day attorney review period after signing, but that window is short. Your attorney should flag any provisions that limit your ability to walk away, restrict resale within a certain period, or allow the developer to substitute finishes and fixtures without your approval.

For a broader look at how the Chicago market is moving right now, including price trends and inventory levels across the city, the Chicago real estate market guide for buyers and sellers covers the full picture for 2026.

2. Deposits, Timelines, and the Risk of Delays

New construction deposits in Chicago are substantially larger than the earnest money you would put down on a resale home, and they are held for a much longer period. Understanding exactly where your money sits during construction and what happens if the project is delayed or cancelled is one of the most important things to sort out before you commit.

How Much You Will Put Down Before Closing

Chicago developers typically require a total deposit of 10 to 20 percent of the purchase price, paid in installments tied to construction milestones. A common structure looks like this: five percent at contract signing, another five percent when the building tops out, and the balance at closing. On a $700,000 unit in a River North high-rise, that means you could have $70,000 to $140,000 tied up before you ever get your keys.

Illinois law requires that developer deposits on new construction condos be held in an escrow account, which protects buyers if the project fails. Ask your attorney to confirm that the contract specifies an FDIC-insured escrow and clarifies the conditions under which your deposit is refundable. Some contracts allow the developer to use a portion of the deposit for construction costs, which is a meaningful distinction.

Why Timelines Slip and What That Means for You

Construction delays are common, and Chicago projects are not immune. Permitting timelines with the City of Chicago Department of Buildings, subcontractor availability, supply chain issues for materials like windows and mechanical systems, and weather during the winter months all contribute to schedule slippage. A project originally projected to close in spring 2026 might not deliver units until late 2026 or into 2027.

This has real consequences for buyers. If you are selling your current home to fund the purchase, coordinating that closing with an uncertain delivery date is genuinely difficult. Many buyers in this situation choose to negotiate a lease-back on their existing home or arrange short-term housing rather than locking in a closing date months in advance. Your purchase contract should specify what happens if the developer misses the outside closing date, including whether you can terminate and recover your full deposit.

3. Reading the Developer's Budget and HOA Documents

When you are buying a condo in new construction, what you know about the HOA before you close is limited, because the association does not yet exist in any operational sense. The developer creates the initial budget, the rules, and the declaration, and buyers need to read all of it carefully rather than assuming it reflects real-world operating costs.

Why the First-Year Budget Is an Estimate

Developers are required by Illinois condominium law to provide buyers with a projected operating budget before closing. That budget covers expenses like door staff, building management, utilities for common areas, landscaping, elevator maintenance, and insurance. The problem is that it is a projection, not an audited figure based on actual operating history.

It is not uncommon for monthly assessments in a new Chicago high-rise to increase by 15 to 25 percent within the first two years once the building is fully occupied and actual costs become clear. Buildings with amenities like a rooftop pool, a fitness center, a dog run, and a concierge desk, which are common in newer developments in Fulton Market and the South Loop, carry higher operating costs than simpler mid-rise buildings. Compare the proposed monthly assessment against similar buildings in the same neighborhood to get a sense of whether the number is realistic.

For context on what condo assessments and pricing look like in established Chicago neighborhoods, the piece on Streeterville condo prices in 2026 is a useful benchmark.

What to Look for in the Condo Declaration

The condominium declaration is the governing document that defines what you own, what the association owns, and what the rules are. Key things to look for include rental restrictions (some new buildings cap the percentage of units that can be rented, which affects both your flexibility and the building's financing eligibility), pet policies, parking allocation, storage unit assignments, and the developer's right to retain unsold units as rentals.

Also review the reserve fund contribution. Illinois law requires new condo associations to fund reserves, but the initial amount set by the developer may be lower than what a mature building would carry. A thin reserve fund means the association has less cushion for major repairs, which can lead to special assessments down the road. Ask your attorney whether the reserve contribution meets the standard recommended by the Community Associations Institute.

4. Financing a New Construction Condo in Chicago

Financing a new construction condo is more complicated than financing a resale purchase, and not every lender is equipped to handle it. Getting clear on your financing options early, ideally before you sign a purchase contract, will save you significant stress later.

Lender Requirements for New Developments

Conventional lenders following Fannie Mae and Freddie Mac guidelines require that a new condo building meet specific pre-sale thresholds before they will lend on individual units. The standard benchmark is that at least 70 percent of the units must be under contract or sold before conventional financing is available. If you are among the first buyers in a building that has not yet hit that threshold, you may need to use the developer's preferred lender or a portfolio lender who holds loans in-house rather than selling them on the secondary market.

Developer-preferred lenders sometimes offer incentives like closing cost credits or rate buydowns to encourage buyers to use them. Those incentives can be real value, but compare the full loan terms, not just the rate, before committing. A slightly higher rate from an independent lender with better terms may cost less over five years than a buydown that only applies to the first two.

The NAR's guide to new construction homes for buyers outlines financing considerations and other key steps worth reviewing as you prepare.

Rate Lock Challenges and How to Handle Them

Standard mortgage rate locks run 30 to 60 days, which is far too short for a new construction closing that is 12 to 24 months away. Extended rate locks are available through some lenders, but they typically carry a fee, often 0.25 to 0.5 percent of the loan amount, and the rate itself may be slightly higher than a standard short-term lock. Some lenders offer float-down provisions that allow you to capture a lower rate if rates drop before closing, which is worth asking about specifically.

Because your financial picture will also change between contract and closing, keep your credit profile stable. Avoid opening new credit accounts, taking on new debt, or making large unexplained deposits in the months before your anticipated closing date. Lenders will pull your credit again shortly before closing, and a changed debt-to-income ratio can affect your approval.

For a detailed breakdown of what you will owe at the closing table, including transfer taxes and title fees specific to Chicago purchases, see the guide on closing costs for buying a home in Chicago in 2026.

5. Inspections, Punch Lists, and Your First Year of Ownership

One of the most common misconceptions about buying a condo in new construction is that because everything is brand new, inspections are unnecessary. That is not accurate. New construction has its own category of defects, and the pre-closing walkthrough is your primary opportunity to document them before you take ownership.

What a Pre-Closing Walkthrough Actually Covers

The pre-closing walkthrough, sometimes called an orientation or delivery inspection, is a formal tour of your unit before closing where you document anything that is incomplete, damaged, or not built to spec. Common items include paint touch-ups, scratched flooring, misaligned cabinet doors, grout issues in bathrooms, appliances that are not functioning, and HVAC systems that have not been balanced.

Hire a licensed home inspector who has experience with new construction, even if the developer tells you it is not necessary. An inspector who knows what to look for in a new Chicago high-rise, such as proper sealing around window frames, correct venting for kitchen exhaust systems, and adequate fire stopping in mechanical chases, will catch things that a first-time buyer would miss. Everything documented during the walkthrough goes onto a punch list that the developer is obligated to complete.

Warranty Coverage and How to Use It

Illinois requires new construction condos to carry a statutory warranty. The coverage periods are tiered: one year for workmanship defects, two years for mechanical systems like plumbing and electrical, and ten years for structural defects. These are minimums; some developers offer longer coverage or third-party warranty programs through companies like 2-10 Home Buyers Warranty.

Document everything in writing during your first year. If you notice a crack in drywall, a leak around a window, or a door that will not latch, submit a written warranty claim promptly rather than waiting. Developers and their warranty administrators are more responsive to documented, timely claims than to issues raised after the one-year workmanship period has expired. Keep copies of all correspondence.

Working with a buyer's agent who has handled new construction transactions in Chicago is genuinely useful at this stage. An experienced agent knows which developers in the city have strong track records for punch list completion and warranty responsiveness, and which ones require more follow-up. For more on what to look for in a buyer's agent for this type of purchase, the first-time home buyer guide for Chicago covers how to evaluate representation before you commit.