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Problems Financing Live/Work Units?

By Matt Goyer June 30, 2009

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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7 responses to “Problems Financing Live/Work Units?”

Robert says:

July 6, 2009 at 5:11 am

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 says:

July 6, 2009 at 11:01 pm

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 says:

July 7, 2009 at 6:59 am

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 says:

July 7, 2009 at 9:57 am

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…
Live lead transfer says:

July 13, 2009 at 5:57 pm

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

December 18, 2009 at 10:04 am

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 says:

December 18, 2009 at 6:04 pm

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.

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