September 22, 2021

    There are many types of mixed-use property loans that professionals use for different investment goals. If you’re unsure of which type of loan to use for your building, this brief guide to mixed-use property loans may help you understand which financing option is right for you.

    What Is a Mixed-Use Loan?

    You may find a mixed-use loan among other standard loans, but not many people know how this loan works. Any building with multi-purpose units can qualify for a mixed-use loan; essentially, most buildings can be eligible for this type of loan.

    For example, suppose a salon owner uses their building for their business and lives on the property. In that case, lenders may consider their property a mixed-use building because they’re using it for business and residential purposes.

    Who Can Benefit From This Loan?

    The type of mixed-use loan varies among borrowers due to their different uses. But mixed-use loans can benefit a variety of business owners and real estate investors alike.

    This loan extends to landlords as well. For example, if a landlord owns a large property that has a retail shop within their apartment building, they can qualify for a mixed-use loan to fund their financial goals.

    Types of Mixed-Use Loans

    Mixed-use loans typically offer a combination of hard money and private money loans that vary in term lengths. There are three main types of mixed-use loans that you can take advantage of, including:

    • Government-backed
    • Commercial
    • Short-term

    Each loan varies depending on its rate, term length, and loan amount.

    Government-Backed Loan

    This type of loan requires that your building is at least 51 percent occupied. Government-backed loans are typically permanent and require a term length of approximately 10 to 30 years.

    Commercial Loan

    A commercial loan is a more traditional mixed-use loan, as banks and other lending businesses support it. A commercial loan requires that your building remains in proper and workable condition, as is the case with any business loan.

    Short-Term Loan

    Just as it sounds, a short-term loan is best in situations in which short-term financing is most beneficial for your current financial goals. This type of loan includes a variety of other loans, including private money loans. The term length typically ranges from six months to a few years.

    Regardless of your financial goals, there are multiple loan avenues that may best suit your business needs. Understanding how to utilize mixed-use property loans to your advantage will prove a successful operation for you and your business.