Mixed-Use Property Mortgage Financing

A property that contains both residential and commercial components (like retail or office) under one title. Common examples include "apartments over retail" or a professional office in a residential-style building. Lenders typically classify it by the percentage of square footage for each use.

It requires more specialized underwriting because it combines two different risk profiles (residential and commercial). However, lenders often like mixed-use assets because they offer diversified income—if one sector is down, the other may remain stable.

A live-work property is a specific type of mixed-use where the business owner lives in the residential portion of the building they operate from. These often qualify for more favorable "owner-occupied" financing terms, sometimes with lower down payments.

Every lender differs, but many preferred programs look for the residential component to be at least 40-50% of the total income or square footage to offer the best rates. If the property is mostly commercial, it will be underwritten as a pure commercial asset.

Typically, one comprehensive commercial appraisal is performed. The appraiser will use both residential and commercial 'comparables' to determine the total market value and will analyze the income from both components to arrive at a stabilized NOI.

Usually not. Mixed-use properties are almost always considered commercial assets and carry commercial interest rates. However, if the property is primarily residential (e.g., a fourplex with one small office), some residential-alternative lenders may consider it.

This depends on local zoning and building codes. If you can legally sever the property into two separate titles, you could potentially get a residential mortgage on the apartments and a commercial one on the retail space, which might lower your overall interest costs.