Apartment and Multifamily Construction Loans
Multifamily & Apartment Construction and Development Financing
Construction financing terms are more competitive than ever. For apartment construction loans, HUD is – as always – offering the most competitive fixed-rate, fully amortized, high-leverage, non-recourse financing. However, those HUD 221(d)(4) projects involve a great amount of bureaucratic paperwork as well as a lengthy timetable (typically seven to 10 months to close).
On the positive side, bank construction loans are readily available for the majority of commercial property construction, such as mixed use, office, retail, industrial, etc. Additionally, they permit you to take your finished/stabilized product and recapitalize as soon as the job is concluded with a cash-out refinance or sale, with minimal or zero prepayment penalty.
With regard to multifamily properties, Fannie, Freddie, and CMBS provide unlimited cash out– as much as 80% LTV contingent upon the specific circumstance. HUD loans, although delivering the maximum leverage, do not typically permit recapitalization (there is a lockout period accompanied by a significant prepayment penalty). With respect to commercial properties, life companies and banks provide comfortable permanent financing solutions with some degree of recapitalization or earnouts.
Call us today toll-free at (833) APT-LEND to consult with a multifamily construction loan expert, or complete this form to arrange for a complimentary assessment.
Important Loan Points
- HUD loans are available for market-rate properties (not just affordable properties).
- Bank, hedge fund, life company, and other construction loans are available.
- HUD loans are non-recourse, including during the construction period.
- Fixed rates available for construction and permanent financing with HUD.
- 1.11 DSCR for affordable housing projects with HUD/FHA 221(d)(4).
- Small bank loan (under $4 million) rates start at Prime + 1.50%.
- Bank loans for larger construction projects start at LIBOR + 250 bps.
- Bank loans are generally full recourse during the construction period, with some offering burn-off options after c/o and stabilization.
Bank and HUD apartment construction loans are available. Get in touch with us today and a multifamily construction loan specialist will reach out to you and discuss your options, including potential pricing, leverage, and timing.
Sample Construction Loan Terms For
Multifamily and Commercial Property
Size: Generally $2 million and up
Amortization: Up to 40 years fixed and fully amortizing (with HUD FHA 221(d)(4))
Maximum LTC: 75% (85% with HUD for market-rate properties)
Rate: Starting from 3.00% interest only, floating
Maximum LTV: 75% (no maximum LTV with HUD 221(d)(4))
Minimum DSCR: 1.20