DSCR Loans for Mixed-Use Properties: Combining Residential and Commercial Spaces

Introduction: Finance Hybrid Real Estate the Smarter Way

Mixed-use real estate combines the income stability of residential units with the upside potential of commercial space. Whether you’re buying a retail storefront with apartments above, or developing a live/work property, mixed-use assets can offer both diversification and long-term returns.

The challenge? Financing.

Traditional lenders often shy away from hybrid properties or require extensive documentation, tax returns, and complex underwriting.

That’s where DSCR loans for mixed-use properties come in.

DSCR financing allows investors to qualify based on the property’s income—not their personal finances. It’s a powerful option for growing portfolios with flexible, income-driven funding.

Benefits:

• With 25+ years in commercial real estate financing, we bring expertise you can trust.
• No tax returns or W-2s required—our DSCR loans focus on property cash flow, perfect for rental investors.
• Fast and flexible funding—close deals quickly with custom loan structures that maximize ROI.
• Short-term rental specialists—we help Airbnb and vacation rental investors secure financing in KS, MO, TN, and FL.

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What Is a DSCR Loan for Mixed-Use Real Estate?

A Debt Service Coverage Ratio (DSCR) loan is an investment loan based on the income a property generates relative to its debt payments. Unlike traditional mortgages, DSCR loans don’t require:

• Personal income verification
  
• W2s or pay stubs
  
• Tax returns
  
• DTI (Debt-to-Income) ratios
  

For mixed-use properties, both residential and commercial rental income are counted in the DSCR calculation.

How DSCR Is Calculated for Mixed-Use Properties

DSCR = Net Operating Income (NOI) ÷ Annual Debt Service

• NOI = Gross Rent – Operating Expenses (maintenance, taxes, insurance, etc.)
  
• Debt Service = Principal + Interest (annual)
  

Example:

• Total rent (residential + commercial): $9,000/month
  
• Expenses: $2,500/month → NOI = $6,500/month
  
• Debt Service = $72,000/year ($6,000/month)
  
• DSCR = $78,000 ÷ $72,000 = 1.08
  

📌 Lenders typically want a DSCR of 1.20 or higher, but some may allow as low as 1.0 with solid reserves or a larger down payment.

What Qualifies as a Mixed-Use Property?

Mixed-use properties contain two or more distinct types of use in the same building or parcel—usually residential + commercial.

Common examples include:

• Storefront retail with apartments above
  
• Live/work townhomes
  
• Office buildings with upper-floor residential
  
• Mixed-use condo buildings
  
• Buildings zoned for both uses
  

⚠️ Most lenders require residential to make up at least 50% of the total income or square footage.

Benefits of Using DSCR Loans for Mixed-Use Properties

✅ No Personal Income Docs

Qualify using rental income only—no W2s, no tax returns, no DTI.

✅ LLC-Friendly

DSCR loans can be closed in your LLC or corporation, protecting your personal assets.

✅ Fast Closings

Compared to banks or SBA loans, DSCR loans typically close in 3–5 weeks.

✅ Refinance or Cash-Out

You can also use DSCR to refinance or pull equity from existing mixed-use investments.

Typical DSCR Loan Terms for Mixed-Use Properties

Real-World Example: Mixed-Use DSCR Loan in Philadelphia

Investor Profile: Maria, part-time investor and café owner
Property: Two residential units over a ground-floor coffee shop
Location: South Philly
Combined Rent: $8,500/month
Expenses: $2,000/month → NOI = $6,500
Debt Service: $5,500/month
DSCR = 1.18

Result:

• Closed in LLC
  
• 70% LTV, 6-month reserves
  
• Used rent roll + leases for both residential and commercial tenants
  
• No W2s or tax returns required
  

Best Markets for Mixed-Use DSCR Lending

Mixed-use DSCR financing works best in cities and neighborhoods with walkability, local business demand, and steady population growth:

• Philadelphia, PA
  
• Chicago, IL
  
• Atlanta, GA
  
• Austin, TX
  
• Columbus, OH
  
• Denver, CO
  
• Baltimore, MD
  
• Los Angeles, CA
  

Best Lenders for Mixed-Use DSCR Loans

Not all DSCR lenders handle mixed-use deals. Here are some that do:

• CoreVest
  
• Lima One Capital
  
• Angel Oak Mortgage Solutions
  
• Velocity Mortgage Capital
  
• BridgeInvest
  
• AVANA Capital
  
• Private lenders & brokers specializing in hybrid assets
  

🧠 Tip: Ask lenders how they weigh commercial vs. residential rent and confirm zoning compliance before closing.

Tips to Get Approved for a Mixed-Use DSCR Loan

• Have current leases for all tenants (residential & commercial)
  
• Ensure the commercial space is legally permitted and occupied
  
• Maintain a credit score of 680+
  
• Prepare a clean rent roll and expense sheet
  
• Provide photos, rent comps, and zoning verification
  
• Keep 6–12 months of reserves in liquid assets
  

Final Thoughts: Simplify Hybrid Financing with DSCR

Mixed-use properties offer the best of both worlds—but getting them financed doesn’t have to be a balancing act. With DSCR loans, you can:

• Skip tax returns and W2s
  
• Use rental income to qualify
  
• Close in an LLC
  
• Refinance or scale faster
  

If you’re ready to grow your portfolio with versatile, income-diversified properties, DSCR loans for mixed-use real estate are the smart move in today’s investment landscape.

Benefits:

• With 25+ years in commercial real estate financing, we bring expertise you can trust.
• No tax returns or W-2s required—our DSCR loans focus on property cash flow, perfect for rental investors.
• Fast and flexible funding—close deals quickly with custom loan structures that maximize ROI.
• Short-term rental specialists—we help Airbnb and vacation rental investors secure financing in KS, MO, TN, and FL.

Apply Now