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Problems Financing Live/Work Units?

June 30, 2009 By 7 Comments

A reader writes in wondering if others have struggled with financing a live/work unit:

Out of curiosity and based on a recent experience, have you ever heard of people having difficulty closing on a live/work condo? I was recently denied based on the condo being classified by the HOA as live/work despite the zoning being residential.. It’s a shame if this were common, quite a few of the condos in the style we like (i.e. high ceilings/exposed ducts/concrete etc.) are live/work so that would limit our choices considerably.

Any readers have any experience with this?

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About Matt

Matt , Urbnlivn's publisher, has a love for lofts with industrial features and new construction condos that is only eclipsed by his passion for outdoor sports and urban living. Phrases such as “polished concrete” and “exposed brick” are music to his ears. You can also find Matt on Twitter or skiing.

  • Robert

    Yes. In general, banks are reducing their portfolio of lending….anything outside the norm of fee-simple, primary residence, single family for a person with great credit and substantial income (relative to home value) and 5-20% down is more challenging to find. Particularly the larger banks who are 'formulating' what they will/won't lend. Smaller, local banks who may not resell the mortgage will be more likely to finance.
    Don't get me started on condo's. They bring on a whole other set of challenges.

    We build live-works and are continuing to look for lenders. They're out there…just hard to find.

  • lemons

    No loan for a unit in a condominium that has >20% non-residential use or a single entity owning >10% is conforming under current FNMA rules. That means no live-work, no small buildings, no new development, no mixed-use, no street-level retail in many cases, etc.

  • Robert

    Yes, everything you say lemons is correct. But there are local lenders, smaller banks that are warehousing their own loans based on a “real” evaluation of the property rather than a government/bank formulated rejection. These loans don't need to meet HUD guidelines because they don't intend to resell to Fannie/Freddie.
    The trick is finding one of these lenders & getting them to do more than just a few units….

  • GoCougs

    If you are truly going to use a live/work loft for work…there are many SBA program loans available. I know first hand of industrial users who have purchased warehouses in the past few months via SBA loans when they couldn't get traditional financing through a lender.

    The catch is that you must be an operating business with viable plan, etc…

  • http://www.tvloanmodificationleads.com Live lead transfer

    I will rather apply a loan company so I can buy my own house rather than live in a condominium..

  • mk

    I'm trying to buy out my partner. We have a legitimate live work building with 75% as shop space. I have 50% of the equity, the loan to value will be about 60%, I have a stable well paying W2 income, with smaller business income. I'm being denied because the business income alone will not cover the note.

  • mk

    I'm trying to buy out my partner. We have a legitimate live work building with 75% as shop space. I have 50% of the equity, the loan to value will be about 60%, I have a stable well paying W2 income, with smaller business income. I'm being denied because the business income alone will not cover the note.