Refinancing a Commercial Loan to a Residential Loan?

[Scott S.]

Hi everyone. I've tried to search a similar topic, but I couldn't find anything quite the same. This is a hypothetical question, but here goes!

A property I'm interested in buying is zoned commercial; downstairs is 1800 sq ft (company occupied) and upstairs is 1800 sq ft (consists of two 900 sq ft apartments). I spoke with my mortgage banker yesterday and asked about getting a residential mortgage for this mixed-use property. She said I can if the commercial square footage is 25% or less (she said that's a typical rule). Because the sq footage is 50% I would need a commercial loan.

SO, lets say I get a commercial loan secured and over the next 10 years, I convert half of the lower level sq footage to a residential apartment. Do you think it's possible to then refinance the property with a residential loan??? The commercial portion of the property would only be 25%. That would open me up to more options and I would then have a much easier time trying to sell the property if residential financing be can be obtained.

I'm a newbie so any help would be apreciated. Thanks!