Can Fourplexes be Commercial?

5 Replies

A quick question, for you guys. I’m looking at a fourplex, and plan to go the house hack route with it. However, my agent wasn’t sure if I could obtain a residential loan on it, even though it’s zoned as a residential property, which most fourplexes are. So, my question is whether fourplexes are always considered residential properties, or, can they be commercial based on a certain characteristic they have?

@Evan Pickvet-Hall Your agent might be referring to the fact that you might not be able to qualify for typical home mortgage programs as most lenders prefer SFRs to even 4 units (even though they are both classified as residential). 

Just consult a mortgage broker and figure out your options.

I work for a commercial mortgage broker.  In our world, regardless of zoning, 1-4 units are "commercial" for financing purposes if they are non-owner occupied.  If you are not planning to live in 1 of the units, you can get a commercial loan for a rehab or flip.  If you have additional questions generally, I am happy to walk you through the concepts.  Thanks.

@Evan Pickvet-Hall I agree with the above comments.  You can get a commercial loan on any size property, if it is not owner occupied and considered an investment property. 

Residential loans generally offer more favorable terms than commercial, that's why don't usually hear about commercial loans on 1-4 units outside of special circumstances.

Consider looking into FHA 203k loans, or obtaining hard/private money for the construction then refinancing back into a traditional 30 year resi loan after stabilization.

You guys have all been very helpful. I do plan to move into it, which was why I wanted to ask, because, clearly, if I’m going to live in it, a residential loan is the superior option, and I wanted to make sure it would be an option. Thanks for the advice, everyone.