Underwriting question for conventional mortgage - San Antonio

[Joseph Weisenbloom]

I have a property that is free and clear that I want to get refinanced with a conventional mortgage. Currently it does not pass underwriting guidelines because it is a duplex that is zoned for single family. I am in the process of getting it rezoned. 

The city is telling me I have 2 options:

1. Get a "conditional use" which will allow the duplex in a single family zone. This option is cheaper and quicker.

2. Submit a plan amendment that will change the zoning from R-6 to MF-33. This option is more expensive and longer.

My question to all the underwriters and mortgage brokers is if I get the property to be approved for "conditional use" will that pass underwriting standards?

[Seth Teel]

@Joseph Weisenbloom So did you decide to rezone or apply for conditional use permit?  Prior to getting the ball rolling you may want to talk with the lender to find out first what their underwriters require and/or will accept.  This should inform the decision as to which avenue to pursue.  

I would also ask the zoning person you have been speaking with if the property can be used as a duplex "by right."  When the city adopted the unified development code several years back, they rezone nearly all of the city.  Many of the existing structures & uses, setbacks, etc. did not fit the new development, and certain items were allowed "by right."  I.e. The property's non-conforming features were "grandfathered in."  This may be the case with your property.  If so, I've had good luck with asking the city zoning department to write something on their letterhead stating this use is allowed "by right," and is compliance with the current zoning.  This has worked for me once and several times for my clients.  There are still lender/underwriters that will not accept this and you may need to get a variance or rezone.  This may save you some of the hassle. 

NOTE: Neither a zoning change or a conditional use permit are rubber stamp applications.  Simply getting the support of the neighborhood association does not guarantee you will get your desired outcome. Sometimes not even having the support of the Councilperson is enough. It sounds like in your case it shouldn't be an issue, since the home is already being used as a duplex.  That being said, you never know which crazies will come out to speak against your case at a zoning committee or board of adjustment hearing.