Can I rehab a building having both residential and commercial space under Section 203(k)?

A 203(k) Rehabilitation Mortgage Insurance Program mortgage may be originated on a "mixed use" property provided:   
•     51 percent of the Gross Building Area (GBA) is for residential use; and 
•     commercial use will not affect the health and safety of the occupants of the residential Property. 

The 203(k) proceeds may not be used to finance costs associated with additions or alterations to support commercial use or to equip or refurbish space for commercial use.  

For additional information see Handbook 4000.1 II.A.8.a.iii. and II.A.8.a.vi.(B) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04793