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- Matched with investor-friendly lenders
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Mixed-use properties are an often-overlooked goldmine for real estate investors. Combining residential units with commercial spaces like storefronts or office suites, these properties offer diversified income streams—and unique financing challenges. Fortunately, DSCR loans provide a flexible solution.
What Are DSCR Loans?
Debt Service Coverage Ratio (DSCR) loans are a type of asset-based financing where the loan is underwritten based on a property’s income—not your personal income or employment history. DSCR is calculated as:
DSCR = \frac{Net Operating Income}{Debt Service}
If the property generates enough rental income to cover its mortgage payments, it may qualify—even if the borrower doesn’t have traditional income documentation.
Why DSCR Loans Are a Smart Fit for Mixed-Use Properties
Mixed-use properties often face resistance from traditional lenders due to their non-standard configurations. A four-unit building with a café below, or a duplex above a retail space, may not check the conventional boxes.
DSCR lenders, however, are increasingly open to financing mixed-use properties—especially when the majority of square footage or income is residential.
Key Benefits:
- No personal income verification: Ideal for self-employed investors.
- LLC-friendly structure: Easily vest in a business entity.
- Supports scaling: No property count limits for seasoned investors.
- Diverse income underwriting: Accepts residential leases and commercial rental income.
5 Creative Ways Investors Use DSCR Loans in Mixed-Use Projects
1. Live/Work Conversions (Without Living There)
An investor buys a vacant building with two apartments upstairs and a former salon below. They convert the commercial space into a co-working suite and lease all three units. Using market rent projections from the appraisal, they qualify for a DSCR loan with no W-2s.
Want to explore this strategy? Submit your property scenario and get matched with a lender.
2. BRRRR on Mixed-Use
Buy, Rehab, Rent, Refinance, Repeat (BRRRR) works beautifully on mixed-use when paired with DSCR loans. For example, one investor buys a distressed corner property, renovates the retail and residential units, and refinances with a DSCR loan based on full lease-up projections.
Explore the BRRRR-Friendly Guide to DSCR Loan Refinancing
3. Combining Short-Term Rental with Local Business Leasing
Mixed-use properties near tourist zones are perfect for this. Residential units are listed on Airbnb, and the street-level space is leased to a boutique or coffee shop. DSCR lenders that accept AirDNA projections can underwrite short-term rental income too.
4. Urban Infill Redevelopment
Some investors are buying older mixed-use buildings in downtown corridors, adding value through renovations. Once stabilized, these properties qualify for DSCR cash-out refinances, which investors use to buy their next asset.
Read more on refinancing investment properties with DSCR loans
5. Portfolio Expansion via Small Town Mixed-Use Buildings
Mixed-use buildings in small towns often have great cap rates but scare off banks. With DSCR loans, if the numbers work (DSCR ≥ 1.20), it’s a green light—even without local banking relationships.
Learn how DSCR loans empower portfolio investors
Key DSCR Loan Requirements for Mixed-Use
| Feature | Typical Requirement |
| Minimum Credit Score | 640–680 FICO |
| Loan-to-Value (LTV) | Up to 80% (often capped at 70–75% for mixed-use) |
| DSCR Threshold | Typically ≥ 1.20 |
| Property Use Ratio | 50%+ of space or income must be residential |
| Legal Structure | LLC-friendly; personal guaranty often required |
| Income Verification | Based on rents (market or actual), not W-2s |
Pro Tips for Success
- Get a rent schedule from a certified appraiser. Most lenders use the lower of market rent or actual leases.
- Ensure the commercial tenant is arms-length. DSCR lenders won’t accept commercial rent if it comes from the borrower’s own business in the building.
- Check zoning. Some lenders may restrict financing based on commercial zoning overlays.
FAQ: DSCR Loans and Mixed-Use Properties
Can I live in one unit of a mixed-use property financed with a DSCR loan?
No. DSCR loans are strictly for investment use only. Owner-occupancy is not allowed.
Will lenders count commercial rent toward the DSCR?
Yes, if the commercial space is leased to a third party and the income is documented, most DSCR lenders will include it.
What if the property is partially vacant?
You may still qualify if the projected market rents result in a DSCR ≥ 1.0. However, cash-out refis typically require at least partial lease-up.
Get Started Today
DSCR loans unlock powerful financing flexibility for mixed-use investments. If you’re considering a project that combines residential and commercial uses, don’t wait for traditional lenders to say no.
See if your mixed-use deal qualifies with a DSCR lender
Read Next
- DSCR Loans for Commercial Properties: Financing Office and Retail Investments
- DSCR Loans for Multi-Unit Properties: Financing Duplexes and Fourplexes
- How to Use DSCR Loans for Commercial Real Estate Development
Get Expert Investment Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
