Mixed Use Zoning, Multi-Family Use

[Daniel B.]

Hi All, we're looking at a property that is zoned mixed use commercial/residential, but is currently being used as a full multi-family building with 3 units in it. 

We're currently waiting on financing from the bank, but I'm wondering if anyone knows whether or not this will be financed as commercial or residential or a mix, and if anyone has suggestions for a lender that will finance it as residential. We want to keep our down-payment/interest rates as low as possible for the deal to make sense so financing as commercial may be a deal-breaker.

[Joel Arndt]

Most 'A' Lenders consider 5+ units to be commercial (in Ontario, at least). So 3 units will fit comfortably under their criteria for residential loans.

Unless the property has commercial space in it (storefront at street level, for example). That's commercial.

The zoning doesn't determine how the lender will decide between residential and commercial. Zoning determines what you're allowed to use that property for, according to the city.

So in the future, say you decide to put a retail space in this property and it's already zoned for mixed residential/commercial use, you shouldn't have a problem. But if it wasn't zoned for commercial at all, then you would have to go to the city and ask for your lot to be rezoned (which is a whole other beast of a process).