DSCR Loans for Mixed Use properties are mortgage loans for properties with a unit mix of commercial real estate (office or retail) and residential real estate (apartments). Traditionally, getting loans for Mixed Use properties required finding a commercial lender, typically a local bank or debt broker. These deals were not very attainable for everyday investors. They were typically out of reach for everyone except larger corporate commercial real estate firms or seasoned, high-net-worth funds.
But no more – Easy Street Capital is proud to expand our innovative DSCR Loan product – known for its easy qualification, flexible underwriting and accessible features for residential real estate investor to now include Mixed Use commercial real estate as well!
New Easy Street Capital Offering – Mixed Use DSCR Loans
Our cutting-edge Mixed Use DSCR Loan program has interest rates starting at just 7.750% and includes 30-year fixed rate or Hybrid 5/6 ARMs mortgage loans between $400,000 and up to $2,000,000! These loans can be utilized to purchase a mixed use investment property or execute a post-value add refinance, with cash-out options allowing up to $1,000,000 in cash-out proceeds! These Mixed Use properties are eligible up to eight units.
While these properties can include up to three commercial units (office or retail spaces), the properties have to be majority residential in three distinct ways:
- 51% of the net rentable square feet residential space (vs. commercial)
- 51% of the underwritten rent (fully leased mandatory) from the residential units
- Half or More of the Units residential
While interest rates may be generally higher on these Mixed Use DSCR Loans, there are some important caveats to consider. These loans typically have 30-year fixed interest rates and options to have a monthly payment fully amortizing or even for the first 10-years of the term to require interest-only payments. This means that even if the interest rate may be a couple percentage points higher for a loan on a Mixed Use property, a shorter amortization schedule, a looming balloon payment, or heightened risk of floating interest rates spiking may make the economics actually better for a DSCR Loan.
If you are interested in applying for a Mixed Use DSCR Loan or want to talk to a lending specialist to run some numbers and offer some quotes, click the button below! In addition, check out the FAQ section on this page for answers to typical questions on this exciting new addition to Easy Street Capital’s DSCR Loans offerings!
Mixed Use DSCR FAQS:
What is the minimum loan amount for a Mixed Use DSCR Loan?
The minimum loan amount for Easy Street’s Mixed Use DSCR Loans is $400,000.
What is the minimum down payment for a Mixed Use DSCR Loan?
The minimum down payment for an Easy Street Capital Mixed Use DSCR Loan is 25% since our maximum LTV, or Loan-To-Value ratio is 75%. This means properties must be valued for purchase at at least $533,333 to qualify.
What is the minimum DSCR ratio to qualify for a Easy Street Capital Mixed Use DSCR Loan?
The minimum DSCR ratio for a Mixed Use DSCR Loan is just 1.00x! This is much lower than the DSCR ratios typically required by CRE lenders for mixed use properties, which are usually in the 1.20x to 1.30x range.
What’s more, the DSCR ratio for a Mixed Use DSCR Loan is calculated like a traditional residential DSCR Loan, by dividing PITIA from the Rents. That means qualification for DSCR does not include many expenses that most commercial lenders typically require like repairs and maintenance, management fees, utilities and vacancy or credit loss.
What is the maximum amount of units for a Mixed Use property to qualify?
The maximum amount of units for a Mixed Use property financed by a DSCR Loan is eight, with a maximum of three of the units having a commercial use.
There is a maximum of one commercial unit for 2-3 unit mixed use properties, two commercial units for 4-5 unit mixed use properties, and three commercial units for 6-8 unit mixed use properties
What is the maximum amount of acres for a Mixed Use property to qualify?
The maximum amount of acres for a Mixed Use DSCR Loan is 2 acres.
What is the minimum credit score I need to qualify for a DSCR Loan for a Mixed Use property?
The current minimum qualifying credit score (FICO) to qualify for a DSCR Loan for a Mixed Use Property with Easy Street capital is 660.
Are there any states in which there are restrictions on prepayment penalties for Mixed Use DSCR Loans?
No, the restrictions in some states that prevent DSCR Lenders from having prepayment penalties on their loans (and thus having to charge higher rates) do not apply to Mixed Use properties, since these are considered purely commercial loans.
Are Gift Funds allowed for the down payment on my Mixed Use loan?
No, unlike many traditional DSCR Loans financing single family rental properties, Gift Funds can not be utilized for the down payment for a purchase of a Mixed Use property financed by Easy Street Capital.
What is the maximum cash-out proceeds for a Mixed Use DSCR Loan with Easy Street Capital?
The maximum cash-out proceeds (cash in pocket after escrows and closing costs) on a cash-out refinance for a Mixed Use DSCR Loan is $1,000,000.
Are Vacant Units allowed for Mixed Use Property DSCR Loans?
No, unlike traditional DSCR Loans where vacancy is generally okay, especially on acquisitions, no vacancy is allowed on DSCR Loans for Mixed Use properties.
Can any of the units at a Mixed Use property that qualifies for a DSCR Loan be utilized as short term rentals?
No, unfortunately units operated as short term rentals (airbnb) are not allowed for qualification under our Mixed Use DSCR Loan program.
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About the Author
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