Can this be through regular conventional loan ?

[Pranay Bomma]

I came across a property in Texas i.e a lot has fourplex plus a separate unit in the back i.e total 5 units. Can this still be considered as a 4plex + ADU and get a conventional loan or it should be commercial loan ?

[Andrew Postell]

@Pranay Bomma Fort Worth, Texas you say?  I might know someone there....but here's the scoop with this:

ADU's - there have been some guideline expansions regarding Accessory Dwelling Units (ADUs) just this month! So it used to be that rental income from an ADU could not be used - now it can. And any multi-family property with an ADU would be prohibited (meaning you could not secure a mortgage on it at all) - and now conventional financing allows 2-3 unit properties to have ADUs. But not 4 :(

Now, the other side of the coin here is that you can certainly get a very fine, 30 year, fixed rate COMMERCIAL style loan for this property.  Rates are crazy right now....so the 2 loan products actually have similar rates currently (but that could change) so if you do want to take it down, there still might be some good options for you.

Hope all of that makes sense but feel free to ask anything additional.  Thanks!