Residential vs. commercial financing

[Anna Dvorak]

We've purchased a home as a primary residence, zoned agricultural and with large acreage. Conventional financing has been a challenge as a result, but we've found a local bank that will work with us. They've presented two options for financing based on our goals -

1. Residential financing - 30 year fixed mortgage
2. Commercial financing - 5/25 year balloon with adjustable rate every 5 years

Both of these loan options would be construction loans, with interest only payments for the first year. We intend to fix up the property while living in it, then rent it out for a handful of weeks (~12 weeks) out of the year as a short term rental. It would still be our primary residence, which makes me lean towards the residential option. 

However, the commercial option was brought up in the context of thinking a year or two down the line - this local bank does not offer a HELOC, only an investment line of credit. We do want to be able to take a line of credit in the future to fund future investment deals. My understanding is investment lines of credit are only given on investment properties (not primary residences).

My question is this - Would it be safer to take out commercial financing now (although not entirely necessary), knowing that we would likely look to take out the investment line of credit in the next year or so? Or should we go with the more appealing residential financing option and cross that bridge for the investment line of credit when we get there? Trying to understand how big of a deal that would be / any concerns or pitfalls to be aware of.

Thank you!!