Skip to main content

September 19, 2012

Live/Work Loft Loans: Talk to Your Lender First


You’ve just hit the open house circuit and found a great loft like the one pictured at 25 Lucerne #1 in SoMa. You want to write an offer and you’re preapproved—a no brainer, correct? Not necessarily, according to my colleagues at Guarantee Mortgage.

A majority of lenders have recently become concerned about “buyback” issues. For example, a lender makes the loan, sells it to Fannie Mae or Freddie Mac, and then is asked by the latter institutions at a later date to buy back the loan because of the live/work nature of the property. Fannie Mae and Freddie Mac are primarily concerned with such restrictions affecting the future value of the property.

As a result, lenders are avoiding lending on live/work properties.

It’s important to know what you’re dealing with. Only “true” live/work lofts are a problem; you identify these by looking for deed restrictions in preliminary title reports and within CC&Rs (the docs that govern the HOA).

Guarantee Mortgage reports that it has at least four lenders willing to lend on live/work projects with deed restrictions. One lender will do so as long as the building meets certain basic Fannie Mae condo requirements. Another lender featuring adjustable and interest-only loans will consider live/work loans on a case by case basis. Yet another two require 30% or 40% down.

So you can see how important it is to get lender clearance up front before you write your offer.

Explore All Posts

Blogging Since 2008

Posts by Neighborhood

Posts by Category

Posts by Year