Mixed Use Loans/Financing Commercial Mixed Use

With 7 Mixed Use Commercial Loan Programs to choose from, Apartment Loan Store will find the right Mixed Use Property financing for you. We will find the right Mixed Use building loan for you with the lowest rates.

Mixed Use buildings usually have commercial space (retail or office) on the first floor with 5 units or more residential apartments above – thus mixed use. Lenders prefer that the majority of the mixed use buildings income and square footage comes from the residential or multifamily side. This is because it could take over 4 months to re-tenant a commercial space and even longer if the space requires a lot of tenant improvements.  On the other hand apartment units can be rented out in less than a week.

Apartment Loan Store’s mixed use financing allows from 25% commercial income and square footage to 75% or more commercial space.  Here are our mixed use loan programs:

 

7 Mixed Use Loan Programs

 

1. Freddie Mac Mixed Use Loans/Financing

Freddie Mac mixed use loan program is one of Apartment Loan Store’s lowest rate mixed use financing programs. These loans are sold and securitized with Freddie Mac in mortgage pools that are offered to investors on Wall Street as mortgage backed securities.  

Freddie Mac Mixed Use Properrty loans can be fixed for 5, 7 or 10 years, have a 30 year amortization and interest only options of from 1 – 10 years. These loans are less stringent to qualify for than conventional bank mixed use financing, as the loans are made primarily to the property.  In most cases tax returns are not required and credit scores can be as low as 660.  Freddie Mac Mixed Use Loans are typically non-recourse and take about 60 days to close.

 

Freddie Mac Apartment Loan Terms and Requirements:

Commercial Space allowed up to 40% of total net rental income and 40% of the buildings total square footage.	Minimum Credit Score 660
Minimum Loan $1,000,000	Net Worth equal to loan size
Up to 80% Loan to Value	9 – 12 months post closing liquidity required
30 year amortization	Replacement reserves may be required
5,7, and 10 year fixed rates	Non-recourse
Converts to an ARM	Tax Returns not required
Interest Only for 1 – 10 years	Step down prepayment available
Assumable	DSCR:  1.20 – 1.25
90% occupancy for 90 days
Interest only available

 

2. Fannie Mae Mixed Use Loans/Financing

Mixed Use Property Fannie Mae Financing is originated by lenders that have delegated authority to approve Mixed Use loans for Fannie Mae. Fannie Mae stands for the Federal National Mortgage Association and is a publicly traded corporation. Lenders close the loans with their own funds and then sell the loans to Fannie Mae in about 30 to 60 days. The lenders then get their money back to lend out again. Fannie Mae Mixed Use mortgages have some of the lowest long term fixed rates (fixed from 5 – 30 years) in America.

 

Fannie Mae Mixed Use Loan Terms and Requirements:

Commercial Space allowed up to 20% of income or 40% of total square footage	680 Minimum Credit Score
Minimum Loan $750,000	Minimum Net Worth Equal to Loan Amount
80%, 75% with cash out	1.25 Minimum DSCR
30 year Amortization	Yield Maintenance Prepayment Penalty
5 – 30 year Fixed Rates/term	90% Occupancy Required for 90 days
No Debt to Income Ratio	Assumable for 1% fee
Non-Recourse	Post Closing Liquidity 12 months payments
Tax returns not required

 

3. CMBS Mixed Use Loans/Financing

Mixed Use Building CMBS loans are originated by lenders who fund the loans with their own funds and then put them in mortgage pools that are sold as mortgage backed securities on wall street.  The lender receives the funds back to lend out again when the mortgage is securitized.  CMBS can be an excellent funding source for Mixed Use properties in that the amount of commercial space is negotiable.  Also rates and terms are very favorable.

CMBS Mixed Use Loan Terms and Requirements:

Commercial Space net income and square footage negotiable	660 Minimum Credit Score
Minimum Loan $2,000,000	Minimum Net Worth Negotable
75% with cash out	1.25 – 1.35 Minimum DSCR
30 year Amortization	Yield Maintenance or defeance prepayment penalty
5 & 10 year Fixed Rates/term	85% to 90% Occupancy Required
No Debt to Income Ratio	Non-Recourse
Assumable for 1% fee	Tax returns not required
Non-Recourse
Post Closing Liquidity Negotiable

 

4. Regional Bank Mixed Use Loans/Financing

Apartment Loan Store has mixed use financing through regional Bank affiliations in all 50 states. These mixed use loan programs have some of the lowest rates available. Rates can be fixed for 3, 5, and 7 years, and sometimes up to 10 years. Typical amortization is 25 years. These are full doc loans requiring a debt to income ratio and tax returns.

Regional Bank Loan terms and requirements:

Commercial Space net income and square footage range from 25% to 40%	680 Minimum Credit Score
Minimum Loan $1,000,000	Minimum Net Worth equal to loan amount
75%  Loan to Value	1.25 – 1.35 Minimum DSCR
25 year Amortization	Yield Maintenance or defeance prepayment penalty
3,5,7 and 10 year Fixed Rates	90% Occupancy Required
Debt to Income Ratio	Recourse
Assumable for 1% fee	Post Closing Liquidity Required is 12 months payments
Tax Returns Required

 

5. USDA Mixed Loans/Financing

This is a low income affordable rents housing program. USDA Loans for Mixed Use complexes of 5 units or more only allow 10% commercial space. These loans are administered by the Rural Development Program of the United States Department of Agriculture. USDA Loans for mixed use properties were created to increase the availability of affordable housing in low population markets. USDA Financing is for new construction, Rehabilitation and the purchase of affordable rent multifamily and mixed use properties.  The program is eligible only in rural communities of less than 50,000 population.  The property cannot be in close proximity to a major population area.   USDA financing features very low down payments (finance up to 90% LTV, 97% for non –profit entities), and rates can be fixed for the entire loan term - 30 years for purchase financing and 40 years for new construction loans.  These loans are easier to qualify for lower net worth investment property owners.

 

USDA Loan Terms and requirements:

• Commercial Space cannot exceed 10% of gross SF, and/or 10% of total income
• For Purchase, Rehab, or New Construction of Multifamily Properties
• Eligible Properties must be in rural areas of less than 50,000 population
• Rehab if needed must be at least $6,500 per unit
• Average rents cannot exceed 30% of 115% of AMI (Area Medium Income)
• Income for Tenants cannot exceed 115% of AMI
• Interest rates are fixed for the life of the loan.  Rates based on 30 year treasury bond rate.
• Amortization:  30 years.  Maximum 40 years for new construction.
• LTV up to 90% for profit entities.  97% for non-profit entities
• Minimum Loan: $2,000,000    Maximum Loan: None
• Interest Rates fixed for up to 30 years.  40 years for New Construction
• Term:  30 years for purchase loans,   40 Years for New Construction
• 640 credit score, no tax liens
• Minimal post closing liquidity required
• Net worth to Loan Ratio can be less than the loan amount
• Loan is Non-Recourse
• DSCR: 1.15
• Prepayment penalty:  Declining for the first 10 years.
• Owner and non-owner occupied properties

 

 

6. Private Lender Mixed Use Loans/Financing

Apartment Loan Store has Mixed Use loans through a network of over 40 private lenders and institutions.  These include publicly traded Hedge Funds, Equity Funds, Investment Funds, REITS and Hard Money Lenders.  The advantage of many of these private lenders is the flexibility on the amount of commercial space allowed and the financial and credit strength of the borrower.  Many of these lenders will make loans to key principals with lower credit scores.  Interest Rates are in the 6.50% to  11.00% range.

 

Private Lender Terms and Requirements:

Commercial Space Square Footage and Income based on what is standard in the market	No Minimum Credit Score
Minimum Loan $2,000,000	Net Worth negotiable
65% - 75%  Loan to Value	1.20 – 1.35 Minimum DSCR
Typically interest only	Typically Non-Recourse
2 – 5 year terms	90% Occupancy Required
No Debt to Income Ratio	Rehabilitation or Repositioning OK
Assumable for 1% fee	Post Closing Liquidity negotiable
Tax Returns Required	Rates: 6.50% to 11.00%
Owner or Non-Owner Occupied

 

7. SBA Mixed Use Loans/Financing

For Owner Occupied Mixed Use Properties. Requires the borrower to have his business occupy 51% of the property.  SBA stands for the Small Business Administration which guarantees a percentage of the loan.  These loans can be used for purchase, refinance or construction.  The greatest benefit of SBA Mixed Use Financing is that the loan to value  can go up to 90%.  There are two loan programs to choose from - the SBA 7(a) and SBA 504. 

SBA Terms and Requirements:

Commercial and Residential tenants can occupy 49% of the property.  The business owner has to occupy 51% of the property	Maximum Loan $14M on the SBA 504
Minimum Loan $750,000	Net Worth negotiable
85% to 90% Loan to Value	1.10 – 1.25 Minimum DSCR
Typically interest only	Recourse
Adjustable and fixed rates	Minimum Occupancy Required to cash flow the loan
Debt to Income Ratio	Rehabilitation or construction OK
Not assumable	Post Closing Liquidity negotiable
Tax Returns Required	Rates tied to Wall Street Prime
Owner Occupied