New Jersey DSCR Loan Helps an Investor Purchase a Mixed-Use Rental Property
A New Jersey portfolio owner bought a fully occupied building with two apartments above a retail space after his bank balked at the mix; the loan was underwritten on the property's combined rental income.
Loan Snapshot
- State
- New Jersey
- Property Type
- Mixed-Use (Two Apartments + Retail)
- Loan Purpose
- Purchase
- Loan Amount
- $623,000
- LTV
- 70%
- DSCR
- 1.17
- Days to Close
- 25
Borrower profile, generalized to protect privacy: a portfolio owner with six rental properties who holds his investments in a limited liability company.
An actual closed transaction. Certain details have been generalized to protect client privacy.
The Situation
A New Jersey investor found a mixed-use property with two residential apartments above a neighborhood retail space. The building was fully occupied and producing consistent rental income, and the buyer already owned several rentals held in his limited liability company. His tax returns, like those of most experienced landlords, showed substantial depreciation and other legitimate real estate deductions.
Why the Bank Said No
The borrower's bank became uncomfortable with the combination of residential and commercial space under one roof. It also wanted a complete review of his personal income, his business returns, and every property he already owned before it would consider the file; a process that would have stretched well past the purchase contract.
The Financing Approach
The purchase was financed through a DSCR program that permits mixed-use properties. Qualification rested primarily on the combined rental income from the apartments and the retail space measured against the proposed housing payment, not on the borrower's personal tax returns, W-2 income, or a traditional debt-to-income calculation. Title was taken directly in his LLC.
The Outcome
The loan closed in August of 2025, inside the purchase contract deadline. The borrower retained the existing tenants and added a diversified income-producing property to his portfolio without restructuring his finances or explaining years of legitimate tax write-offs.
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The Borrower's Challenge
The original bank did not want to finance a property containing both residential apartments and commercial space, and the borrower's tax returns showed reduced taxable income because of depreciation and other legitimate real estate deductions.
The Loan Structure
A mixed-use DSCR purchase loan closed in the borrower's LLC. Qualification was based primarily on the combined rental income from the apartments and the retail unit rather than personal tax returns.
How We Solved It
Underwriting measured the building's combined rents against the proposed payment and treated the retail unit as part of the property's income rather than as a problem to be explained away. No personal debt-to-income calculation was required.
The Result
The borrower closed within the purchase contract, retained the existing tenants, and added a diversified income-producing property to his portfolio.
Actual scenario; certain details have been generalized to protect client privacy. Individual results vary. This is not a commitment to lend, and past outcomes do not guarantee the terms, timing, or approval of any future loan.
Reviewed by Eddie Luhrassebi, Founder & CEO, NMLS #337071 | CA DRE #01230650
Last updated: July 16, 2026 · About the reviewer