Are mixed-use properties eligible for Fannie Mae and Freddie Mac?

Yes when multifamily NOI represents 75 percent or more of total property NOI. Both agencies finance qualifying mixed-use properties under conventional multifamily programs.

What is the 75/25 NOI rule?

Agency multifamily programs typically require multifamily to represent at least 75 percent of total property NOI. Properties exceeding 25 percent retail NOI fall outside agency conventional programs and access CMBS or other capital sources.

Can ground-floor retail be financed at agency rates?

Yes when the multifamily NOI represents 75 percent or more of total property NOI. The agency loan covers the entire mixed-use property at agency multifamily rates.

What insurance is required?

Combined multifamily and retail insurance covering both components, plus appropriate liability and umbrella coverage.

Are mixed-use properties more or less recession resilient?

Multifamily component provides recession resilience; retail component carries more cyclical exposure. Mixed-use total cash flow is typically more stable than pure retail but less stable than pure multifamily.

What is the typical operating margin?

Mixed-use operating margins typically run 55 to 65 percent NOI margin reflecting active retail leasing, multifamily operations, and integrated property management.

Can SBA finance mixed-use?

For owner-occupied mixed-use (where the borrower's business occupies a portion of the retail), SBA 504 can finance subject to standard SBA size and use eligibility. Investor-owned mixed-use is not SBA-eligible.

What is the typical mixed-use cap rate?

Stabilized mixed-use trades at cap rates between multifamily and retail comps for the same market, typically 5.50 to 7.00 percent depending on mix and market.

Mixed-Use Apartments Over Retail Financing

At a Glance

Mixed-Use (Apartments Over Retail) Financing Snapshot

Typical loan size

$5M to $100M

Maximum LTV

65 to 75 percent

Typical DSCR floor

1.25x to 1.40x

Term

5 to 30 years

Recourse

Non-recourse with carve-outs

Multifamily-to-retail mix

75/25 typical for agency

Lender count actively quoting

~25 to 40 multifamily + mixed-use

Capital Source Map

Where Mixed-Use (Apartments Over Retail) Loans Come From

Mixed-use apartments-over-retail financing operates across multifamily and retail capital channels depending on revenue mix. Properties with 75 percent or more NOI from multifamily access agency programs; properties with greater retail mix access CMBS, life co, or specialty retail lenders.

Capital Source	Rate Range (Apr 2026)	LTV / Down	Best Fit
Fannie Mae DUS (multifamily-dominant)	5.85 to 6.30%	70 to 75 percent	75%+ multifamily NOI; ground-floor retail acceptable
Freddie Mac Optigo (multifamily-dominant)	5.75 to 6.25%	70 to 75 percent	75%+ multifamily NOI; ground-floor retail acceptable
CMBS conduit	6.45 to 7.35%	65 to 70 percent	Mixed-use $10M+ with substantial retail component
Life insurance company	5.85 to 6.65%	55 to 65 percent	Trophy mixed-use with strong tenant mix
Bank balance sheet	7.25 to 8.85%	60 to 70 percent	Mid-market mixed-use with depository

Pricing is indicative and reflects active CLS CRE quote pipeline as of April 2026. Actual pricing depends on property condition, sponsor profile, deal size, and market dynamics.

Deal Profile

Typical Mixed-Use (Apartments Over Retail) Deal

Mixed-use transactions range from $5M for smaller infill properties (10 to 30 units over ground-floor retail) to $100M+ for major mixed-use developments. Per-unit pricing reflects the multifamily component plus retail value contribution.

Sponsor profiles include urban multifamily developers, mixed-use specialists, and institutional capital. Major US cities (NYC, LA, Chicago, Boston, San Francisco, DC) feature dense mixed-use development.

Operating revenue blends multifamily rent (typically 60 to 80 percent of NOI) and retail rent (20 to 40 percent of NOI). Multifamily provides cash flow durability; retail provides higher per-square-foot revenue but with operating volatility.

What Lenders Look For

Mixed-Use (Apartments Over Retail) Underwriting Considerations

Mixed-use underwriting evaluates the multifamily and retail components separately and the integrated property dynamics.

Multifamily-to-retail mix: 75/25 typical for agency
Ground-floor retail tenant credit and lease structure
Multifamily occupancy and rent growth
Retail occupancy and tenant performance
Property condition: separate multifamily and retail components
Sponsor experience: mixed-use operating expertise
Local zoning: mixed-use zoning supports the format
Operating complexity: dual-product management

Pitfalls We See

Common Mixed-Use (Apartments Over Retail) Financing Pitfalls

Mixed-use transactions have specific failure modes around retail tenant turnover, agency NOI mix thresholds, and operating complexity.

Retail tenant turnover affects total NOI
Agency NOI mix thresholds: 75/25 boundary affects financing access
Operating complexity: dual-product management
Capital expenditure: separate multifamily and retail cycles
Insurance: combined coverage required
Local zoning shifts
E-commerce pressure on retail component
Mixed-use lender appetite varies by market

From the CLS CRE Pipeline

A Real Mixed-Use (Apartments Over Retail) Deal

On a $24M ground-up 8-story mixed-use development in a major urban market (84 multifamily units over 12,000 sq ft of ground-floor retail), the sponsor was a mixed-use developer. Construction debt at SOFR + 525 (10 percent all-in), 70 percent LTC ($16.8M), with Fannie Mae forward commitment at 5.95 percent fixed 10-year for permanent take-out at stabilization (multifamily NOI projected at 76 percent of total).

All deal references anonymize borrower and lender identities and use city-level geography only.

Mixed-use apartments-over-retail is a fundamentally different financing product than pure multifamily or pure retail. The 75/25 NOI mix threshold for agency access is critical. Sponsors plan capital structure around that boundary deliberately.
Trevor Damyan, Commercial Lending Solutions