Mixed-use bridge loans

What lenders look at

Residential vs commercial share

The split of income and square footage between residential and commercial. Buildings that are mostly residential tend to get treated more like multifamily; mostly commercial ones are underwritten more like retail or office.

Ground-floor vacancy

Vacant storefronts are common and drag on value. Lenders look at how long space has been vacant, what it would take to lease it and realistic market rents.

Commercial lease terms

Remaining term, renewal options, who pays taxes, insurance and maintenance, and whether rents are at market.

Tenant type and use

Restaurants, bars and other uses with grease, odor, noise or late hours carry different risk than offices or service retail.

Residential rent roll

Unit rents, occupancy and any rent regulation affecting the residential units.

Building systems and code

Separate metering, fire separation, and whether the commercial and residential uses comply with current code and zoning.

How leverage works

Many asset-based bridge lenders lend around 65–75% of as-is value on mixed-use property that is mostly residential, and less when commercial space makes up a larger share or sits vacant. When there is a plan to renovate units or build out commercial space for a tenant, some lenders fund it on a loan-to-cost basis from a holdback. Older buildings with code issues or mostly vacant ground floors usually see lower leverage.

Use the commercial bridge loan sizer to see whether LTV or LTC decides your loan. The deal form asks for square feet, occupancy today and current NOI, so lenders see the numbers they size on.

Documents lenders ask for

• Residential rent roll and commercial rent roll
• Commercial leases, amendments and any estoppel certificates
• Trailing 12-month operating statement
• Purchase contract or current loan payoff statement
• Renovation or tenant improvement budget
• Leasing plan and broker opinion of commercial rents for vacant space
• Insurance declarations and loss runs
• Certificate of occupancy or zoning confirmation
• Entity documents and sponsor real estate schedule

How fast it closes

Mixed-use bridge loans commonly close in about 14–30 days. The appraisal can take a bit longer because the appraiser has to value both residential and commercial components. Lenders often request tenant estoppels for commercial leases, and some require a zoning report to confirm the mixed use is legal. Files slow down when commercial leases are informal or missing, or when the certificate of occupancy doesn't match the current use.

Common bridge scenarios

Acquisition with vacant storefronts

Buy a building with strong residential income and empty retail space, then lease the commercial side.

Unit and storefront renovation

Fund upgrades to residential units and a commercial build-out for a new tenant.

Maturing loan payoff

Pay off a bank loan that can't be renewed because of commercial vacancy.

Cash-out recapitalization

Pull equity from a stabilized building to fund other projects while waiting for permanent debt.

Typical exit

Stabilized mixed-use property typically refinances with a bank or credit union, CMBS or, when mostly residential, agency debt, or is sold.