Mixed-Use DSCR Loans

Where residential and commercial income meet

Eligible commercial uses are retail, office and restaurant. Commercial space must be no more than 49.99% of the building area and commercial rent must be no more than 49.99% of total property income. Both limits matter; passing one does not satisfy the other.

• 2–3 total units: maximum 1 commercial unit.
• 4–5 total units: maximum 2 commercial units.
• 6–8 total units: maximum 3 commercial units.
• Commercial space must be occupied; short-term rental income is not eligible.

Loan structure and investor eligibility

The base program requires a minimum 700 credit score and a DSCR of at least 1.00. Loans range from $400,000 to $2 million. At the $1.5 million tier, maximum LTV is 75% for purchase, 70% for rate/term refinance and 65% for cash-out. The $2 million tier limits purchase to 70% and rate/term to 65%.

The borrower must have owned and managed commercial or non-owner-occupied residential real estate for at least one year in the last three years. First-time investors and first-time homebuyers are not eligible.

State, vacancy and property restrictions

Illinois and New York are ineligible. Connecticut, Florida and New Jersey require at least 720 credit, with 70% maximum purchase LTV and 65% maximum refinance LTV. Rural property is ineligible; eligible non-rural acreage is limited to two acres.

Use the lower of market rent and the lease for occupied units, less any management fee shown on the appraisal. Vacant residential units use 75% of market rent and must be actively marketed. Maximum vacancies are one for 2–3 units and two for buildings with four or more units.

What to prepare for a building review

A full interior inspection with photographs of every unit is required. A commercial appraisal review or second appraisal accompanies the valuation; Pennsylvania and North Carolina use a commercial evaluation in place of a commercial BPO.

• Rent roll, executed leases and an income and expense statement.
• Floor plans showing residential and commercial areas.
• Entity and guarantor documents, asset verification and investor history.
• Six months of PITIA reserves, or nine months for loans above $1.5 million; cash-out cannot satisfy reserves.