Mixed-Use Feasibility Study: Component Demand, Lender Rules, Tax Credits and Blended Coverage

A mixed-use feasibility study tests each part of a building as its own business, the apartments, the storefronts, the offices and any hotel rooms, and then shows whether the parts together can pay the loan in every year of lease-up, not only once the building is full. Lenders read a mixed-use project this way because the components rent to different tenants, fill at different speeds and fall under different program limits, and one blended number can hide the weak part.

Four facts frame most mixed-use loan files:

• The upper floors depend on renters who are already stretched. The United States had 46,551,688 renter households in 2025, and 51.8% of those with a computed ratio paid 30% or more of income for rent [1].
• The ground floor competes with online sales. E-commerce reached 17.1% of seasonally adjusted retail sales in the second quarter of 2026 [2], and 67.7% of retail establishments had fewer than 10 employees [3].
• Lenders cap the commercial income they will count. HUD limits commercial space under Section 221(d)(4) to 25% of net rentable area and commercial income to 15% of effective gross income [4], and Fannie Mae reduces net commercial income above 20% of effective gross income [5].
• State law is opening commercial land to housing. Since September 1, 2025, Texas cities above 150,000 people in counties above 300,000 must allow mixed-use residential projects, with residential uses of at least 65% of the square footage, in zones that allow office, commercial, retail, warehouse or mixed use, without a zoning change [6]. Florida, Montana, Arizona, Oregon, Maine and Rhode Island have their own versions, and Massachusetts requires transit communities to zone for multifamily housing as of right.

This page sets out what the study must prove for each component; how HUD, Fannie Mae, SBA and USDA treat commercial space in a residential building; how Opportunity Zone, New Markets Tax Credit and depreciation rules read the residential share; what state by-right and parking laws, condominium regimes and accessibility rules add; and how blended coverage behaves while the components lease up. It ends with the documents the study needs and what to track after closing. The calculator below models up to three components year by year. For the residential side alone, see the multifamily feasibility study; for a ground-floor restaurant, the restaurant feasibility study; for clinic or practice space, the medical office feasibility study.

Every study ends in one of three conclusions: feasible as proposed; feasible with stated conditions, such as less commercial space, a signed anchor lease or a larger lease-up reserve; or not feasible as proposed, with the changes that would make it work.

What is a mixed-use feasibility study?

It is an independent analysis, written for the lender's file, of whether a building that combines housing with commercial space can support its financing. It covers the market for each use, the site and its zoning, the cost to build and how shared costs are split, the leases, the lease-up schedule, and the cash flow that pays the debt.

Federal programs use the term in their own rules. HUD's multifamily guide says "Commercial facilities may be included in a mixed-use project, subject to programmatic space, income, and vacancy and collection loss limitations" [4]. USDA's guaranteed loan rule authorizes "mixed-use properties involving both commercial business and residential space" [7]. Three building forms cover most loan requests:

1. Vertical mixed use. Apartments above ground-floor shops, restaurants or offices, often over a parking podium.
2. Main street and adaptive reuse. An older commercial building with storefronts and upper-floor apartments or offices, bought or renovated by an owner who often runs the ground-floor business.
3. Horizontal mixed use. Separate residential, retail, office or hotel buildings on one site, sharing parking, access and common areas.

A feasibility study is not an appraisal. An appraisal estimates value at a date; the study tests whether the plan works, component by component, and what would have to change. For what separates a study a lender can rely on from one it cannot, see what makes a feasibility study bankable.

Why do lenders split a mixed-use project into components?

Because each component has its own demand, its own tenants and its own rules, and a lender needs to know which one carries the debt. The program guides require the split. HUD's appraiser must "calculate income, vacancy and collection loss, operating expenses, and replacement reserves attributable to commercial space separately from the residential space," and a separate commercial-space operating deficit is calculated in addition to the residential one [4]. Fannie Mae takes 10% off actual commercial income before it counts it [5]. SBA lets rental income from the project property into the global cash flow analysis but "it must not be included in the repayment ability analysis" [8].

Exhibit 1. What the lender tests in each component

Source: HUD MAP Guide; Fannie Mae Multifamily Guide, as cited in each row. Demand evidence and risks describe FSC's method.

The split also decides the capital stack. When commercial income is small, the building can usually be financed as an apartment property that has some shops. When it is large, the project may need a commercial lender for part of the building, or a program built for mixed use, such as HUD's Section 220 [4].

How deep is renter demand for the upper floors?

Deep but price-limited. Renters occupied 46,551,688 of 134,063,422 occupied housing units in 2025, a 34.7% share, and the median gross rent was $1,557 a month [1]. Rent burden is the constraint: among renter households whose ratio could be computed, 51.8% paid 30% or more of income for gross rent, and 26.2% paid 50% or more [1].

Exhibit 2. Renter households by gross rent as a share of household income, United States, 2025

Source: U.S. Census Bureau, American Community Survey 2025 1-year, table B25070, national row [1]. Brackets combined and shares calculated by FSC; shares use the 43,437,030 renter households for which the ratio is computed.

The study therefore prices the apartments against the incomes of the households that would live there, not against the newest building in the market. A rent that only a small slice of local renters can pay fills slowly, and when the apartments produce most of the income, slow residential lease-up moves coverage more than any other assumption.

New supply sets the competition. Permits for units in buildings with five or more units reached 651,302 in 2022, the high point of the 2019 to 2025 series, and fell 28.8% to 463,972 in 2025 [9]. Completions lag permits: 608 thousand multifamily units were completed in 2024, the most in the 2019 to 2025 series, and 484 thousand in 2025 [10].

Exhibit 3. Housing units authorized and rental vacancy in buildings with five or more units, United States, 2019 to 2025

Source: U.S. Census Bureau, Building Permits Survey, annual state files st2019a to st2025a, United States rows [9]; Housing Vacancy Survey, Table 5 [11]. Totals, shares and valuation per unit calculated by FSC; permit valuation is the construction value reported on the permit, not total development cost. The 2025 vacancy rate is based on 11 months of data.

Vacancy has risen since 2022. The rental vacancy rate in buildings with five or more units was 6.7% in 2022 and 8.5% in 2025 [11], and 8.9% in the third quarter of 2026 [11]. A study that assumes stabilized occupancy near full has to show why its building will beat a national vacancy rate near 9%. Lease-up speed is measured locally, from comparable buildings that opened in the last few years; the calculator below treats it as an assumption the user controls.

Which states show the largest multifamily pipelines?

Ten states accounted for 61.9% of the units authorized in buildings with five or more units in 2025 [9]. The share of a state's permits in larger buildings varies widely: 65.7% in New York against 22.6% in North Carolina [9].

Exhibit 4. Ten states with the most housing units authorized in buildings with five or more units, 2025

Source: U.S. Census Bureau, Building Permits Survey, st2025a [9]; American Community Survey 2025 1-year, B25003 and B25064 [1]; County Business Patterns 2023, state file [12]. Compiled from FSC's state data layer and re-read from the raw files; shares calculated by FSC.

A state row is a screen, not a market. The study works at the level of the trade area: the census tracts within a short drive or walk, the renter households and incomes there, and the buildings under construction nearby.

Who leases the ground floor, and how much retail can a site support?

Mostly small local businesses. County Business Patterns counted 1,043,373 retail establishments and 714,532 food service and drinking place establishments in 2023 [3]. In retail, 67.7% of establishments had fewer than 10 employees; in personal care services, such as salons and barbers, 87.0% did [3].

Exhibit 5. Who leases ground-floor and office space: establishments by industry, United States, 2023

Source: U.S. Census Bureau, County Business Patterns 2023, U.S. file cbp23us, all legal forms [3]. Employees per establishment and size shares calculated by FSC. CBP 2023 uses NAICS 2017 codes.

Small tenants mean short credit histories and personal guarantees, so the study reviews each signed or proposed tenant: years in business, financial statements, the lease term against the loan term, and who pays for the build-out. A building whose storefronts depend on first-time operators needs a longer lease-up and a larger reserve than one with a grocer or pharmacy on a long lease.

Online sales take a growing share of goods spending. E-commerce rose from 16.3% of seasonally adjusted retail sales in the second quarter of 2025 to 17.1% a year later, and e-commerce sales grew 12.2% from a year earlier against 6.7% for total retail [2].

Exhibit 6. U.S. retail sales and e-commerce, seasonally adjusted, 2nd quarter 2025 to 2nd quarter 2026

Source: U.S. Census Bureau, Quarterly Retail E-Commerce Sales, 2nd Quarter 2026, Table 1, last revised August 18, 2026 [2]. Estimates cover businesses with paid employees and are not adjusted for price changes.

That is why the study favors ground-floor uses a customer has to visit: restaurants and coffee, personal care, fitness, medical and dental offices, and convenience goods. The study tests each proposed use against the trade area's spending and its existing supply. For restaurant space, the restaurant feasibility study goes deeper.

HUD's guide lists what a market analysis must cover when a project has a commercial component: traffic counts; trends in commercial vacancy rates and rents in the submarket; competing centers nearby; a sample of asking rents; the pipeline of commercial projects; expenditures compared with supply to find gaps for retail; and an opinion on achievable rents [4]. It adds that this level of detail is likely not needed for commercial space under 5,000 square feet [4]. The same list is a sound outline for any lender.

How do commuting and work-from-home patterns change ground-floor demand?

They decide who is near the building on a weekday. In 2025, 12.9% of the nation's 165,214,453 workers worked from home, 2.4% walked to work and 3.8% used public transportation [13]. Of the workers who did not work from home, 24.8% reached work in less than 15 minutes and 18.0% took 45 minutes or more [14].

Exhibit 7. How workers commute, United States and nine states with recent zoning reforms, 2025

Source: U.S. Census Bureau, American Community Survey 2025 1-year, tables B08301 [13] and B08303 [14], national and state rows. Shares calculated by FSC; travel time shares exclude workers who worked from home.

The study pulls the same tables for the trade area's census tracts. Residents who work from home, plus nearby employees from County Business Patterns, are the weekday customers for a café or pharmacy. High walking and transit shares let a storefront draw customers who never park and strengthen the case for fewer spaces. Long commutes move spending toward the ends of the trip, away from the building.

How does an office or hotel component change the credit?

Both add a second business with its own demand, its own lease-up and its own lender appetite, so the study tests each one on its own terms before it adds the result to the blend.

Office. Most office-using businesses are small firms. In 2023, 83.9% of professional, scientific and technical services establishments and 82.2% of finance and insurance establishments had fewer than 10 employees [3]. Small suites often mean shorter leases and tenant improvement cost at each renewal. No federal series publishes office vacancy or rents by market, so the study surveys competing buildings directly: available space, asking and achieved rents, concessions and the time vacant suites have stayed vacant. Medical and dental tenants are a different credit; see the medical office feasibility study.

Hotel. A hotel is a business, not a lease. HUD-insured projects cannot serve transient or hotel purposes: "Leases for less than 30 days are prohibited," and the rule also applies to any commercial space funded by the mortgage [4]. SBA treats a hotel as an eligible operating business only if more than 50% of revenue comes from guests who stay 30 days or less [8]. USDA's Business and Industry program lists hotels and motels among eligible tourist facilities [7]. In a HUD-insured building, then, a hotel has to sit outside the insured mortgage, and the study models it as a separate component with its own demand study and capital source.

What competing supply does the study count?

Every project that could open before or during the subject's lease-up, sorted by how likely it is to be built. A new apartment tower nearby hurts the upper floors but may help the storefronts, so each stage is counted by component.

Exhibit 8. How the study treats competing projects by stage

Source: FSC method. HUD requires the pipeline of commercial projects in the market analysis for a commercial component [4].

Nationally, private spending on new multifamily buildings peaked at $139,273 million in 2023 and fell to $116,178 million in 2025, while general office construction fell from $67,662 million in 2022 to $51,028 million in 2025 [15].

Exhibit 9. Private construction put in place by building type, United States, 2022 to 2025 (millions of dollars)

Source: U.S. Census Bureau, Construction Spending, Annual Value of Private Construction Put in Place [15]. Changes calculated by FSC; current dollars.

The pipeline that matters is local: municipal permits, planning agendas and site visits in the trade area.

How do HUD and Fannie Mae treat commercial space in an apartment building?

Both allow it and both limit it. The statute lets a Section 221 project "include such commercial and community facilities as the Secretary deems adequate to serve the occupants" [16]. For Section 220 in redevelopment areas, the project "shall be predominantly residential," and any nondwelling facility must contribute to the economic feasibility of the project [17]. HUD's MAP Guide turns those words into limits.

Exhibit 10. HUD commercial space and income limits by program

Source: HUD, MAP Guide 4430.G, 2020 edition (revision of March 19, 2021), sections 3.3, 3.4, 3.7, 7.7.12.9 and 7.7.14 [4].

Four details matter in practice:

1. Waivers exist but are narrow. Regional Center Directors may waive the income limits so long as the property is not primarily commercial, and new construction with commercial income above 20% of effective income in a Section 220 eligible location should use Section 220 instead [4]. A space waiver requires proof that the extra space will not harm residents and has "ample market support" [4].
2. Parking can count as commercial. Income from residents for parking is ancillary, not commercial. Income from non-resident parkers counts against the commercial limits, at an occupancy no higher than the lower of market and history or 50 percent [4].
3. Coverage follows the program. For Section 221(d)(4), loan amount is limited to 85% of replacement cost and a coverage of 1.176 for market-rate projects, 87% and 1.15 for affordable housing, and 90% and 1.11 with 90% or more rental assistance [4]. Section 220 uses the same criteria [4].
4. The guide in force is the one HUD lists. HUD's guidebook page lists the 2020 MAP Guide, dated 03/24/2021, as the current version [18]. HUD can change specific requirements by notice, so the study confirms the limits with the lender at the start.

Fannie Mae's multifamily guide counts "actual income from leased and occupied commercial space," deducts 10% of it, and reduces net commercial income to 20% of effective gross income if it is higher [5]. For small owner-occupied buildings, Fannie Mae's single-family guide allows a business use only if the property is a one-unit dwelling the borrower occupies as a principal residence, the borrower owns and operates the business, and the property is primarily residential [19]. Each lender and agency sets its own limits; the study applies the lender's current guide.

Exhibit 11. How each program reads a mixed-use building

Source: HUD MAP Guide; 12 U.S.C. 1715k; Fannie Mae Multifamily Guide and Selling Guide; SBA SOP 50 10 8.1 and 13 CFR 120.131; 7 CFR Part 5001, as cited in each row.

When will HUD waive its limits, and which commercial leases will Fannie Mae count?

HUD waives the commercial income limit only with mitigating evidence, and Fannie Mae counts only leases that are already producing rent. Exhibit 12 sets the two side by side.

Exhibit 12. What HUD and Fannie Mae ask of the commercial space in an apartment loan

Source: HUD MAP Guide, sections 7.7.13 and 7.7.14 [4]; Fannie Mae Multifamily Guide, Part II, Sections 111 [21] and 203 [5].

A storefront leased on a letter of intent, or to the developer's own company, adds little to the loan under either program. The study shows coverage with and without those leases.

How does SBA treat a mixed-use building?

SBA finances an operating business that uses the building, not the apartments in it. "Apartment buildings and mobile home parks are not eligible," and businesses "primarily engaged in owning or purchasing real estate and leasing it for any purpose are not eligible" [8]. The regulation bars passive businesses owned by developers and landlords that do not use the assets financed [20]. Shopping centers and similar models that rent space to independent businesses are also ineligible, with a narrow exception for membership models [8].

The building can still contain apartments. In an existing building zoned for commercial and residential use, the business owner "may either occupy or rent to a third party the space zoned for residential use," within the occupancy limits [8]. The limits apply "regardless of whether the Rentable Property is leased to a commercial or residential tenant" [8].

Exhibit 13. SBA rules that decide a mixed-use loan

Source: SBA SOP 50 10 8.1, effective October 1, 2026, eligibility, occupancy and credit sections [8]; 13 CFR 120.110 and 120.131 [20].

Consider a restaurant or retail owner buying a two-story main street building with apartments upstairs. If the business occupies 51% or more of the rentable property, SBA can finance the purchase, and the apartments count as leased space. If the apartments take more than 49%, the loan does not fit SBA, however strong the business, and the study points the borrower to a conventional loan or, in a rural area, a USDA path. SBA's procedures add that independent reports, feasibility studies among them, "may be beneficial in mitigating any weaknesses identified in the credit analysis" [8].

How does an eligible passive company own a mixed-use building?

It owns the real estate and leases all of it to the operating business. SBA treats this Eligible Passive Company (EPC) and Operating Company (OC) structure as a narrow exception to its ban on financing passive assets [8]. The EPC leases 100% of the rentable property to the OC, which must occupy 51% of an existing building or 60% of new construction and may sublease the rest, apartments included [8][20]. The OC's rent cannot exceed the loan payment plus the EPC's direct holding costs, the EPC may do no other business, and each holder of at least 20% of either company guarantees the loan [8]. Short-term rentals of residential or commercial space must also comply with local law, zoning and association rules [8].

What does an SBA 504 mixed-use project need from the borrower?

At least 10% of project cost, more for a new business or special purpose building. A third-party lender generally provides 50% or more, and a Certified Development Company up to 40% through a debenture [8].

Exhibit 14. SBA 504 and 7(a) limits that size a mixed-use loan

Source: SBA SOP 50 10 8.1, effective October 1, 2026 [8].

SBA can also ask for a feasibility study itself, for example when the project size is disproportionate to the community it will serve, the market is saturated, or the concept or property is unusual [8]. A main street building sized for a larger market than the town supports meets that test on its face.

Can USDA Business and Industry loans finance mixed-use in a rural town?

Yes, if the business side earns at least half the revenue. The rule authorizes mixed-use properties "provided that not less than 50 percent of the business's projected revenue will be generated from business use" [7]. It also lists "Constructing or equipping facilities for lease to private businesses engaged in commercial or industrial operations" as an eligible use [7].

Exhibit 15. USDA Business and Industry rules for mixed-use projects

Source: 7 CFR Part 5001, revised as of January 1, 2026 [7].

The 50% test reads on revenue, not space, so the study projects revenue by component. A rural main street building with a ground-floor grocery and four apartments upstairs can pass if the grocery earns at least half of projected revenue; the same building with a small storefront under ten apartments usually cannot. Location is confirmed before anything else, because the rule says "Applications cannot be approved subject to meeting rural area requirements" [7].

How do Opportunity Zone and New Markets Tax Credit rules treat a mixed-use building?

Both can help fund one, and the apartment share of rent decides a lot. A building is residential rental property if 80 percent or more of its gross rental income comes from dwelling units; hotel rooms are not dwelling units when more than half are used on a transient basis [22]. Residential rental property is depreciated over 27.5 years and nonresidential real property over 39 years [22]. For New Markets Tax Credits, rental real estate is a qualified business only if it is not residential rental property under that 80% test and has substantial improvements [23], so a building whose apartments earn less than 80% of gross rent can qualify and one above the line cannot. Opportunity Zone rules turn on asset and improvement tests instead [24]. The study projects gross rent by component for every year, because a residential share that drifts across 80% changes the tax treatment.

Exhibit 16. Federal tax rules that change a mixed-use capital stack

Source: 26 U.S.C. 168, 45D and 1400Z-2, 2024 edition [22][25][24]; 26 CFR 1.45D-1 [23]; Public Law 119-21, sections 70421 and 70423 [26].

Public Law 119-21, approved July 4, 2025, made both programs permanent [26]. For zones designated after it, a low-income community has median family income at or below 70 percent of the state or metropolitan median, or a poverty rate of at least 20 percent with income at or below 125 percent [26]. For amounts invested after December 31, 2026, a 5-year hold earns a basis increase of 10 percent of the deferred gain, or 30 percent in a qualified rural opportunity fund [26]. Each state may designate no more than 25 percent of its low-income communities [27].

Credits also change the ownership chart. HUD allows a master lease when Historic or New Markets Tax Credits are combined with an FHA-insured loan; the master tenant subleases the residential units and commercial space, and its rent must cover all obligations under the insured mortgage [4].

What do mixed-use zoning districts and form-based standards require?

They decide what can be built, how tall, how close to the street and with how much parking, so the study reads the actual code for the site. Many cities have several mixed-use districts, and some add form-based standards that regulate the building's frontage and form rather than only its use. Raleigh's Unified Development Ordinance is a clear example of both.

Exhibit 17. One city's mixed-use rules: Raleigh, North Carolina

Source: City of Raleigh, Unified Development Ordinance, Sec. 3.1.1, 3.2.6 and 3.4.9 [28][29][30].

The study translates each standard into cost and income. A 13- or 15-foot ground story adds structure but makes the space rentable to restaurants and shops. A transparency minimum fixes the storefront glazing budget. A build-to line and a ban on parking in front push parking behind or under the building, which leads to the podium question below.

Parking rules differ widely from city to city. Raleigh's parking table sets vehicle maximums rather than minimums, with no maximum for many uses, and it sums the limits when a lot has several uses [31]. It defines shared parking as spaces available to the general public or to another property [32].

Exhibit 18. Raleigh vehicle parking maximums by use

Source: City of Raleigh, Unified Development Ordinance, Sec. 7.1.2, parking requirements by use [31].

Other cities set minimums instead, sometimes varying them by district or near transit. The study lists the requirement for each use, the spaces planned, any shared-parking agreement, and the cost of each space by type.

Which states now require cities to allow housing in commercial zones?

A growing group, each with its own tests, so the study reads the state statute before the city code. Texas, Florida, Montana, Arizona, Oregon, Maine and Rhode Island require some or all cities to allow housing or mixed use on commercial land without a rezoning, and Massachusetts requires transit communities to zone for multifamily housing as of right.

Exhibit 19. State laws that open commercial land to housing and mixed use

Source: the statutes cited in each row. Summaries by FSC; each statute has further exclusions, such as airports, historic districts and hazard areas.

The statute changes the study in three ways. It lowers approval risk only if the program meets the test, so a Texas building with less than 65% residential space goes back to ordinary zoning [6]. It caps the commercial share from below or above, which is the same share lenders limit. And affordability conditions, such as Florida's 40 percent for 30 years [33], put regulated rents into the residential rent roll.

Exhibit 20. Housing units authorized by building size in the reform states, 2025 and January to September 2026

Source: U.S. Census Bureau, Building Permits Survey, st2025a [9] and year-to-date st2609y [40], units, imputed totals. Sums and shares calculated by FSC; 2026 covers nine months.

Permits are not a verdict on any law; several are recent and some cover only large cities. The study uses state rows only to frame the local pipeline.

How are state parking reforms changing mixed-use budgets?

They cap what a city can require, which can take structured spaces out of the budget, though tenants and lenders may still want them.

Exhibit 21. State limits on parking requirements for housing and mixed use

Source: the statutes and bill summary cited in each row. Summaries by FSC.

A cap is what a city may require, not what tenants will rent. Grocers, medical tenants and many restaurants write parking into their leases, so the study counts the spaces the law requires, the leases require and the market needs, and prices each structured space. Colorado still lets a city require parking for projects of twenty units or more if it publishes written findings [41].

How do parking and podium construction shape the budget?

They are costs the rents do not directly pay for, and in a podium building they can be among the largest lines in the budget. Most new multifamily units are in taller buildings: 61% of multifamily units completed in 2025 were in buildings with four or more floors, and the share stayed between 55% and 61% from 2019 to 2025 [10]. Wood framing still dominates, at 68% of units completed in 2025, with steel at 10% and concrete and other types making up the rest [43]. Parking inside the building is common but not the norm: 21% of multifamily buildings completed in 2025 had parking within the building only, and 8% had parking both in the building and elsewhere in the complex [44].

Exhibit 22. New multifamily construction: height, framing and parking, United States, 2019 to 2025

Source: U.S. Census Bureau, Characteristics of New Housing, multifamily units completed by number of floors [10] and by framing [43], and multifamily buildings completed by type of parking [44]. Framing shares other than wood and steel include concrete and other types, not shown separately.

Permit valuations give a floor for cost, not a budget. The average construction value reported on permits for units in buildings with five or more units rose from $126,844 in 2019 to $166,325 in 2025 [9]. That figure excludes land, parking structures built under separate permits, soft costs and financing.

No federal source publishes the cost of a podium, a structured parking space or a ground-floor commercial shell, so the study prices them from the architect's plans and contractor bids, and labels any figure without a bid as an assumption until a bid replaces it:

• Assumption: podium configuration. A concrete base holding ground-floor commercial space and parking, with wood-framed residential floors above, is a common design for buildings of four to seven stories. The building code and the local fire marshal set the limits; the architect confirms them.
• Assumption: structured parking cost. Each structured or underground space costs far more than a surface space, so the study tests how many spaces the zoning requires, how many the market needs and whether paid parking recovers any of the cost.
• Assumption: commercial shell and tenant improvements. The budget separates the landlord's shell, the tenant improvement allowance and any venting, grease interceptor or plumbing for restaurants.
• Assumption: cost allocation. Shared costs such as the podium, lobby, elevators and parking are allocated to components by area, by income or by a documented mix, and the study shows how the result changes with the method.

The allocation matters to the lender because it decides each component's cost basis and return. A podium charged entirely to the retail space can make the storefronts look unfeasible when the building as a whole works.

When should the shops and the homes be separate condominium units?

When the parts will be financed, sold or run by different owners. A condominium regime splits one building into a commercial unit and a residential unit, each with its own deed, mortgage and share of common costs, so a bank or SBA lender can finance the storefronts while an agency lender finances the apartments.

Exhibit 23. Condominium rules that shape a mixed-use building

Source: HUD MAP Guide, section 3.1.31 [4]; Fannie Mae Selling Guide B4-2.1-03 (11/04/2026) [45]; Florida Statutes 718.404 [46].

Texas counts condominium developments as mixed-use residential or multifamily development under its by-right law [6]. When the homes will be sold, the study adds a sell-out analysis: competing for-sale projects, presales and deposits, closing pace and the carrying cost of unsold units.

Which accessibility rules apply to each part of the building?

Two federal regimes: the Fair Housing Act design rules for the homes and the ADA rules for public accommodations in the commercial space.

Exhibit 24. Federal accessibility rules by component

Source: 24 CFR 100.201 and 100.205 [47][48]; 28 CFR 36.104, 36.401 and 36.406 [49][50][51].

The architect certifies compliance. The study checks that the budget carries the elevators, accessible routes and parking, and that a shared lobby or garage works for both regimes.

What is blended coverage when components lease up at different speeds?

It is the building's total net operating income divided by its debt service, measured year by year while each component fills on its own schedule. The calculator's default assumptions have the apartments reach stabilized occupancy after 15 months, the storefronts after 24 and the offices after 30; the study replaces those assumptions with evidence from comparable buildings and signed leases. Because the components fill at different speeds, blended coverage in the first year sits far below coverage at stabilization, and the gap has to be funded by a reserve, interest-only payments or equity.

Lenders narrow what they count while the building leases up:

• HUD counts commercial occupancy at no more than the market or 80%, uses a commercial vacancy factor of at least 20% for new construction, and requires a separate commercial-space operating deficit [4].
• Fannie Mae counts only leased and occupied commercial space, less 10%, with net commercial income capped at 20% of effective gross income [5].
• SBA keeps rental income from the project property out of the repayment analysis and expects projected coverage of 1.15 within 2 years from the end of construction [8].

The study shows each component's net operating income by year, the blended coverage, the shortfall in each year when income does not cover debt service, and the component that carries the debt at stabilization. The calculator below does the same with your inputs. Its defaults are illustrative assumptions, not market data; for reference, the 10-year Treasury yield was 4.88% and the bank prime rate 7.00% on November 9, 2026 [52].

The three worked cases in the calculator show the patterns lenders look for. They are model results from illustrative inputs, not market facts.

Exhibit 25. Calculator test cases: blended coverage by year (model results)

Source: FSC mixed-use calculator, calculator.md, cases A to C. All inputs are illustrative assumptions.

In Case A the apartments produce 73.1% of stabilized income but cover only 0.96 of the debt on their own, so the loan depends on the storefronts and offices leasing as planned, and the commercial share of 23.7% would exceed a 20% program limit. Case B shows the profile the program limits favor: the apartments alone cover 1.28, and the commercial share of 7.0% fits even a 15% limit. In Case C blended coverage stays below 1.0 through Year 3 and reaches only 1.06 at stabilization against a 1.25 target, and the residential income alone would support about $3.76 million of the $11.0 million loan at that coverage. The fixes are less office space, more equity or a reserve sized to the shortfall.

Which stress tests show where the loan breaks?

The ones that move one component at a time, then several together. Exhibit 26 runs them on Case A; every input and result is illustrative.

Exhibit 26. Stress tests on calculator Case A (model results from illustrative inputs)

Source: FSC mixed-use calculator, Case A inputs ($10,000,000 loan at 6.75% over 30 years, 12 interest-only months, target 1.20), changing only the inputs named. Model results, not market data.

Slower apartment leasing leaves stabilized coverage at 1.31 but adds $134,754.22 to the shortfall the reserve must fund. An empty office floor drops stabilized coverage to 1.15 because its costs keep running, which is why lenders ask for office pre-leasing. A one-point rate rise alone pushes coverage below target. The study also tests the loss of any anchor tenant and, since no federal source publishes capitalization rates by component, takes value from the appraisal and tests a higher rate on the commercial income.

How does phasing change the study?

Each phase must stand on its own. HUD limits the absorption period for new units to 18 months from delivery of the first units and lets larger projects phase in additional units under a separate application [4]. The study tests phase one without phase two, assigns shared costs such as a garage built for both, and counts later phases as competing supply.

What must a mixed-use feasibility study contain?

1. The conclusion first, with any conditions or required changes spelled out.
2. The project defined by component: units by type, commercial square feet by use, parking spaces, phasing and the capital source for each part.
3. Program fit: the commercial space and income limits, occupancy tests or revenue tests of the intended program, measured from the plans.
4. Zoning: district, permitted uses, height, frontage and transparency standards, parking rules and any approvals still needed.
5. Residential demand: renter households, incomes and rent burden in the trade area, comparable buildings, new supply and vacancy.
6. Commercial demand for each use: trade area spending, competing space, traffic counts, vacancy and rent trends, and gaps the site can fill.
7. Office and hotel demand where planned, each as its own market study.
8. Tenant review: signed and proposed leases, tenant financial strength, terms against the loan term and build-out responsibility.
9. Rents and operating expenses by component, with expense recoveries shown separately for commercial leases.
10. A development budget with podium, parking and commercial shell costs, each line cited to a bid, a quote or a labeled assumption, and a stated method for allocating shared costs.
11. A lease-up schedule by component, month by month, from comparable buildings and pre-leasing.
12. Net operating income by component and year, blended coverage by year, and the stabilized coverage on the lender's basis.
13. The lease-up shortfall and the reserve, interest-only period or equity that covers it.
14. Downside cases: slower residential lease-up, a vacant storefront, a lost anchor, lower rents and higher rates.
15. Every source and assumption listed, with model outputs labeled as such.

What documents does a mixed-use feasibility study need?

The ones that let each component and program test be checked against a source. This checklist goes out at scoping.

Exhibit 27. Document checklist for a mixed-use feasibility study

Source: FSC method; program rules as cited.

What should the owner and lender track after closing?

The component numbers the study projected, month by month, because a loan can meet its covenants overall while one component drifts.

Exhibit 28. Tests that keep running after a mixed-use loan closes

Source: as cited in each row; the last row is common lender practice, not a rule.

What does a mixed-use feasibility study cost, and what does it deliver?

FSC does not publish a fixed fee for mixed-use studies, because scope depends on the number of components and capital sources; each is quoted after scoping. The deliverables are constant: a signed report with the conclusion first; a market section for each component; a program-fit section measured from the plans; a zoning review, including any state by-right path; the cost allocation, lease-up schedule, component income and blended coverage by year with stress tests; every source and assumption listed; and written answers to the lender's questions.

How the study runs

1. Scoping: confirm the capital source, program, loan size, components and the tests that apply.
2. Document intake: plans, budget, zoning approvals, leases and letters of intent, operating history for existing buildings, and any purchase contract.
3. Field and market research: site visit, trade area definition, residential and commercial surveys, and zoning review.
4. Model: component income and expenses, lease-up by month, debt service, blended coverage and downside cases.
5. Review: the draft is checked against the lender's questions and revised only for new facts.
6. Final report: signed by Sarrah Allen, MAI, with written answers to the lender's follow-up questions. More about who prepares the study is on the about page.

Download the evidence behind this page's exhibits (CSV, 667 data points with sources)