Mixed-use buildings combine commercial space, such as a storefront or office, with residential units. They can be strong income properties, but they do not always fit standard mortgage guidelines. Mixed-use DSCR loans offer another path.
What Is a Mixed-Use DSCR Loan?
It is an investor loan for a property with both business and living space, qualified mainly on the rental income the building produces rather than on your personal income. The same debt service coverage idea applies: the property’s income is compared with its debt payments.
Common Mixed-Use Property Types
- Retail storefronts with apartments above
- Office space with residential units
- Multi-unit buildings with a commercial tenant
- Small mixed-use buildings in downtown or resort areas
Why Investors Like Them
- Multiple income streams from commercial and residential tenants
- Qualification focused on property income
- Purchase and refinance options, including portfolio growth
- Flexible ownership, with many investors buying through an LLC
What Lenders May Review
Each program has its own guidelines, but you should be ready to discuss:
- Lease agreements and rent rolls for both commercial and residential tenants
- The split between commercial and residential square footage
- Property taxes, insurance, and operating costs
- Your credit profile and down payment
- Reserves and property condition
Mixed-use properties can be more complex than standard rentals, so allow time for a thorough review and ask what documentation will be needed.
Tips Before You Buy
- Confirm zoning and permitted uses.
- Review tenant leases and lease terms carefully.
- Understand vacancy risk, especially for commercial space.
- Run the DSCR numbers before making an offer.
- Compare terms, including any prepayment provisions.
Get Guidance on Your Next Building
Cole Boren of DSCR Loans With Cole helps investors explore mixed-use financing, from purchases to refinances. Call 702 275 5997 or email cboren@cmghomeloans.com.
About the author: Cole Boren provides DSCR lending solutions for real estate investors through CMG Home Loans. Learn more at https://www.dscrloanswithcole.com/. NMLS# 384591 | Company NMLS #1820. Programs, rates, and terms are subject to change and approval.
