Residential Property in Commercial/Industrial Zoning

You may think that residential and commercial/industrial zones do not overlap. However, this is not the case. Mixed-use properties have become common, especially with an increase in renovation and self-employment. What are some examples and how do you apply for a loan?

Mixed-Use Property Examples

The most common examples of mixed-use properties are old storefronts in the middle of a city or bustling town also containing an upstairs or back apartment. Usually, these apartments are owner-occupied, but occasionally they can be rented out. Other examples are houses that have been converted into offices or retail spaces, such as boutiques or cafes. 

Loan basics

Banks and other lenders assess several factors when determining whether or not to approve your loan application. For example, they consider your property’s location, your financials, your property’s resale value, the demand for a mixed-use property and if your property is leased, the borrowing strength of the tenant. Some banks may classify mixed-use properties as high-risk because the market is not always high. For example, people may not want to live above retail space. 

Typically, you are more likely to be approved for a loan if the government can rezone the property as residential or you intend to lease out the commercial property. 

Your financial situation has a significant impact on whether or not your loan will be approved. Since lenders view mixed-use properties as high risk, having a high income or steady employment may improve your chances. Mortgage House and our brokers can help you secure a competitive loan that fits your needs if you are denied.