Did You Know?

FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

Get an FHA Refinance Loan
Get an FHA Purchase Loan
FHALoan.com
Get an FHA Refinance Loan
Get an FHA Purchase Loan
Click to Start Your Refinance or Purchase Loan

FHA Loans For Mixed-Use Property


FHA Loans For Mixed-Use Property
Mixed-use properties combine residential and commercial spaces. Some borrowers applying for FHA home loans want to know if purchasing such a property using an FHA single-family home loan is possible.

The FHA does allow the use of its loans for mixed-use properties, but certain conditions must be met:

Primary Residence Requirement: As with most FHA mortgages, the borrower must intend to occupy a portion of the property as their primary residence. This is non-negotiable.

Residential Nature: The property must be primarily residential, with most of the floor space dedicated to residential use.

Property Type: FHA loans for mixed-use properties are typically limited to one- to four-unit purchases.

Commercial Use Limitations: The commercial use of the property must be permissible under local zoning regulations. FHA loan rules do not include local zoning regulations, you must check with the local authority.

Challenges and Considerations

Some sources report that mixed-use properties undergo a more complex appraisal process, as the appraiser must consider the property's residential and commercial aspects. Whether this is true of your transaction will depend greatly on multiple variables.

Because FHA imposes restrictions on the type and extent of commercial use allowed, this option may not be suitable for all business ventures. In this context, any business that has safety issues associated with its day-to-day operation may not be suitable for an FHA loan.

FHA Loan Process For Mixed-Use Properties

The process of applying for an FHA loan for a mixed-use property is similar to that of a traditional FHA loan but with a few key differences. One thing that’s important to be mindful of? The lender’s experience in lending for mixed-use or mixed-zoning properties.

The following considerations will be critical for loan approval when considering a mixed-use home loan. Remember, the mixed-use property may be viewed as a higher risk for the lender, and your loan approval criteria may be adjusted accordingly:

Strong Credit Score: Higher FICO scores can improve your chances of approval and may qualify you for a lower interest rate.

Low Debt-to-Income Ratio: A lower debt-to-income ratio demonstrates your ability to manage your finances and make timely mortgage payments.

Sufficient Cash Reserves: Your application will be strengthened by having enough cash on hand to cover the down payment, closing costs, and potential repairs.

Experienced Real Estate Agent: Work with a real estate agent familiar with mixed-use properties and can guide you through the process.
See Your Credit Scores From All 3 Bureaus
See Your Credit Scores From All 3 Bureaus

FHA Loan Articles

What Affects a Home Loan Applicant's Credit the Most?

A home loan is one of the most important investments you can make. Buying a home means owning property, and being a homeowner means there's potential to watch your investment grow in value over time.  But first, the lender has to make sure the borrower is a good credit risk.

When Buying with an FHA Loan, Don't Skip the Home Inspection

This wait isn’t easy when you've been shopping for a new home. But getting a home inspection is a crucial step, and not one you should consider skipping. Make sure you hire a reliable home inspector, wait for your inspection report, and watch out for these red flags. 

Reasons for FHA Refinancing

Interest rates started to decline in 2019 and still seem considerably low. The average rate for a 30-year, fixed rate home loan has fallen from 4.94% in November 2018 to 3.13% in October 2021. A point drop in your interest rate could translate to huge savings with each monthly payment

What You Need to Know About the FHA Rehab Loan

The FHA Rehabilitation Loan program allows lenders to cover the purchase or refinance, as well as the rehabilitation of the home, as part of a single mortgage. This loan can be used to finance a property that is at least one year old with a total cost of repairs amounting to at least $5,000

FHA Loan Requirements for 2021 and Beyond

The FHA’s aim is to make homeownership more affordable and accessible for Americans, and it has been doing so for decades. It insures home loans made by FHA-approved lenders so borrowers can purchase single-family and multi-family homes in the US and its territories. 

FHALoan.com is not a government agency. We do not offer or have any affiliation with loan modification, foreclosure prevention, payday loan, or short term loan services. Neither FHALoan.com nor its advertisers charge a fee or require anything other than a submission of qualifying information for comparison shopping ads. We do not ask users to surrender or transfer title. We do not ask users to bypass their lender. We encourage users to contact their lawyers, credit counselors, lenders, and housing counselors.

SecureRights Advertiser Contact Information