I am looking to purchase a home using an FHA loan. The house we found is in a commercially zoned area that allows residences.

Asked by Kwall83, New Jersey Sat Feb 20, 2010

The property itself is surrounded by businesses, and is zoned commercial/residential. I called the township and they said that yes, we would be able to rebuild a residence if there was a fire or some sort of other problem, and that didn't believe that any business would even be approved for the building because the lot isn't wide enough to comply with their business zoning laws. We want to use it as a residence, but the bank we talked to told us there will likely still be a problem obtaining an FHA because of the number of businesses in the immediate area. I'm not entirely clear as to why that is the case if the lot we're looking at is too small to house a business? They said the house would be considered legal non conforming, but the zone, though commercial, allows residential buildings to be constructed, so wouldn't a residence in that area be legal? Can anyone shed any light as to why the bank is telling us this property would not be approved by FHA?

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Steve Kappre, , Gloucester County, NJ
Sat Feb 20, 2010
Kwall83 -

There are a few things you will need to get this done. You will need comps (comparable properties) available when the property is appraised. If there are no similar properties anywhere near you, it could be an issue. The appraiser will also have to make note that the highest and best use is as such (a residential single family home). You made mention that the town will let you build it again if need be, so you should be good there.

Let me know if you need further help. If the property is in NJ and you want me to take a further look into it let me know.
Web Reference:  http://njmortgageblog.com
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