What Is a Mixed-Use Property Loan?
A mixed-use property loan finances buildings that contain both commercial space (retail, office, restaurant) and residential units. The classic example is a building with storefronts on the ground floor and apartments above. Mixed-use properties present unique financing challenges because they straddle the line between residential and commercial lending.
If the property is 2-4 residential units with commercial space under 25-35%, some residential lenders will finance it. If commercial space exceeds that threshold, you need a commercial loan.
The classification question: A 4-unit building with a ground-floor cafe using 20% of the square footage might qualify for a residential loan (lower rate, 30-year term). The same building with a cafe using 40% would require commercial financing (higher rate, shorter term). Square footage allocation drives the loan type.
Who Mixed-Use Loans Are For
- Investors purchasing mixed-use buildings with retail + residential
- Owner-occupants living above their business (SBA-eligible)
- Small business owners buying their building with residential units for income
- Developers converting properties to mixed-use
Key Features
Residential-qualifying mixed-use: conventional or DSCR terms, 30-year fixed, 15-25% down. Commercial mixed-use: 20-30% down, 5-25 year terms, based on NOI. SBA 7(a) and 504 available for owner-occupied commercial portions. Rates and terms vary based on the residential/commercial split.