Multifamily Construction Loans – 7 Best Programs – 2026

7 Top  Multifamily/Apartment Construction Loans

1. HUD/FHA lenders have the best program because they lend the most at 87% Loan to Cost (LTC) are non-recouse loans and have the lowest rates tied to the 10-year treasury. They require experience, but are negotiable on borrower financial strength. (Program Details) Install a button on list of bullet points

• Minimum Loan: $7,000,000   Maximum Loan - None 
• 87% of Cost for Market Rate Developments, 90% of Cost for Affordable Housing 
• 36 month Construction Loan rolls over seamlessly to 40-year fixed rate perm loan 
• Perm Loan Term: 40 Years, Amortization 40 years 
• Exceptionally Low 40 year fixed rate 
• DSCR: 1.176 on permanent loan 
• Perm loan rate is locked prior to construction and is also you perm loan rate
• Non-Recourse construction and perm loan 
• No Tax Returns Required 
• FF&E may be financed 
• Construction Draws (average monthly) 
• No minimum Net Worth Requirement 
• 7.5% Post Closing Cash Requirement 
• Good Credit Required with No Tax Liens 
• Multifamily Ownership and Development Experience Required (Ask us about finding you a consultant or partner with the experience). 
• Program can lend in any location

2. Life Company Lenders have non-recourse loans and are excellent for borrowers with strong experience and a net worth more than twice the loan size and liquidity equal to more than the loan.  They have very low rates tied to SOFR, and many options for large markets.  They only lend 70 -75% LTC. 
(Program Details)

• Minimum Loan $20,000,000, No Maximum 
• Loan to Cost up to 70% 
• Subordinate Mezzanine debt may be allowed up to 80% CLTC 
• Term 36 months 
• 1 month SOFR plus 2.50 – 3.50 
• DSCR: 1.20 on permanent loan 
• Non-recourse 
• Mini-perm not needed 
• Roll over to low rate 10, 15, 20 or 25 year fixed rate perm loan 
• Net Worth Requirement equal to 1.5 to 2 times loan amount 
• Post Closing Liquidity Requirement equal to 50% of the loan amount 
• Excellent Credit Required Highly Experience Developer with Multifamily Ownership Experience Required
• Construction Draws Monthly

3. National Bank Lenders have the next best rates tied to SOFR, can offer flexible terms, and go up to 75% LTC.  They require borrowers to have a net worth of twice the size of the loan, strong experience and liquidity equal to the size of the loan.  They prefer large and medium-sized markets unless they have a branch in your town.
 

• Minimum Loan $10,000,000 Maximum Loan $100,000,000 
• Up to 70% Loan to Cost 
• Rate: SOFR plus 2.75%-3.25%
• DSCR: 1.25 on permanent loan 
• Term 24 – 36 months 
• Recourse 
• No mini perm needed 
• Roll over to Bank Permanent Loan 
• Draws bi-monthly to monthly 
• Net Worth requirement the size of the loan amount 
• Post closing liquidity requirement equal to 20% of the loan amount 
• Excellent Credit Required
• Multifamily Development and Ownership of a similar size property required

4. Regional Bank Lenders lend more than National Banks at 80% LTC, and require a net worth equal to the size of the loan and liquidity equal to half the size of the loan amount. They can usually lend in neighboring states to a branch of theirs. They have higher but decent rates tied to SOFR.

• 
  Minimum Loan $10,00,000  Maxmum Loan: $80,000,000 
• Up to 75% of Cost 
• No subordinate debt allowed 
• Term 24 months 
• 1 month SOFR plus 3.00% Interest Rate (Interest only payments) 
• DSCR: 1.25 on permanent loan 
• Recourse 
• Usually no mini-perm needed. 
• Roll over to perm loan of your choice 
• Draws weekly to bi-weekly 
• Net Worth Requirement equal to loan size 
• Post Closing Liquidity Requirement equal to 15% of the loan size 
• Experience building a similar size project required 
• Excellent Credit and Income Required

5. Community Bank Lenders are the best for low experience, net worth, and liquidity. Borrowers must have excellent credit and income. 

Minimum Loan: $1,000,000   Maximum Loan:  $15,000,000  

• Loan to Cost up to 75% 
• No subordinate debt allowed 
• Term 12 – 18 months 
• Prime floating to prime plus 1.50% rate (interest only payments) 
• DSCR: 1.25% on permanent loan 
• Recourse 
• Mini-perm available if need for absorption and stabilization 
• Roll over to perm loan of your choice 
• 48 hour draws available 
• Net Worth Requirement Negotiable 
• Post Closing Liquidity Requirement Negotiable 
• Good Credit Required 
• Good Income Required

6. Credit Union Lenders require borrowers that have excellent credit and are stronger financially than community banks.  They can lend up to 75% LTC, and have lower rates tied to the 10-year treasury than community banks. Some experience is needed.

• 
  Minimum Loan: $1,000,000   Maximum Loan:  $20,000,000 
• Loan to Cost up to 70% 
• No subordinate debt allowed 
• Term 18 months 
• Prime plus .50% to prime plus 1.50% rate (interest only payments) 
• DSCR: 1.25% on permanent loan 
• Recourse 
• Roll over to perm loan 
• Weekly draws available 
• No prepayment penalty on permanent loan 
• Net Worth Requirement equal to 50% to 100% of the loan amount 
• Post Closing Liquidity requirement equal to 10% of the loan amount 
• Good Credit Required

7. Private Debt Fund Lenders are bridge loan lenders that come in handy if you need to close fast and have less than perfect credit.  They lend up to 80% of the completed stabilized value and are negotiable on financial strength.  They do however require experience of a similar size and scope development and have high rates tied to SOFR. 

• 
  Term up to 24 months 
• DSCR: 1.25 on Permanent Loan 
• Non-Recourse 
• Roll over to Fannie Mae or Freddie Mac perm loan 
• Draws bi-monthly to monthly 
• Net Worth required equal to the size of the loan for all key principals combined 
• Post closing liquidity requirement:  10% of the loan amount
• Fair to Good  Credit Required 
• Minimum Loan $10,000,000, Maximum Loan $50,000,000 
• Loan to Cost: 70 - 75% 
• 1 month Libor plus 4.00% to 5.00%  (interest only) 
• Subordinate Mezzanine debt may be allowed up to 80%  CLTC

Our Advertisment
Apartment Loan Store     We have over $200,000,000 in Multifamily 
Prequalify in Minutes        construction loans booked now. We will be pleased
Get a loan Quote               advise you on to qualify for the loan you want.

FAQs About Multifamily Construction Loans

Q3: How much do I have to put down on a multifamily construction loan?
    A: Usually, it is going to be between  25 and 30%. However,  for HUD/FHA it can be as little as 13%.  
Q4: Do I need experience as a developer to get multifamily construction loan financing?
    A: The answer is yes, with the exception of some small community banks, all other lenders require you to have experience developing a similar size and scope project.
Q5: Which multifamily construction lenders have the lowest rates?
    A: Without question the answer is HUD/FHA followed by life companies.  Large National Banks that have an abundance of deposits can be very competitive on rates for stronger customers.
Q6: Can I get a second Mortgage for a multifamily construction loan?
    A:  Sorry, but most lenders will not allow this because the less skin in the game you have, the higher the risk is for them. For large loans of $20M or more, it is possible to get mezzanine financing for up to 15%.  With a 70% first mortgage you can achieve 85% loan to cost (LTC).  HUD/FHA will not allow mezzanine financing because they already lend up to 87%.  
Q7: Do I need to have cash left over after the closing of my multifamily construction loan?
    A: Yes, no lender will allow the borrower to be stone broke after loan closing.  See the chart at the top of this article to see much post-closing cash you need for each loan program.
Q8:  What reports such as an appraisal do I need for multifamily construction financing?
    A:  With the exception of HUD/FHA, all multifamily construction loan programs require an appraisal and environmental report.  HUD/FHA as well as programs for large construction loans will require a market study.
Q9:  What can I do if I do not have the experience or financial strength to get the  multifamily construction loan I want:
    A:  You will need to bring in a partner(s) that has the expertise and deep pockets necessary to qualify.  
Q10: Can I be the developer and general contractor on my multifamily construction loan?
    A: If you have experience doing this before many community banks and credit unions will allow this.  However, most other lenders will not allow it because they view you doing both positions as a conflict of interest. If you are the developer, who will keep the contractor in check if you are one and the same?
Q11: How do multifamily construction lenders size a loan?
    A: First, all construction lenders start out by projecting the size of the permanent loan that will be taking out the construction loan. To be conservative, they stress (increase) current permanent loan interest rates. This always produces a smaller size future perm loan as well as the construction loan you are applying for.  The last thing they want is to lend more money on the construction loan than the permanent loan can afford to refinance.  Next, they order an appraisal, a market study or both to project rents, expenses, and cap rates - and most importantly – the absorption rate. This is a projection of how many units per month are estimated to be rented for the project to reach market occupancy. If the absorption rate is off by as little as 3 months this can add a lot of unexpected cost to the project and cause it to not be successful. 
Q12: What are the Risks of taking out a multifamily construction loan?
    A:  As a mortgage banker I made my first multifamily construction loan in 1997.  It did not take long for me to understand why these loans, like all commercial construction loans,  have the highest risk for borrowers and lenders.  Why?  because there are so many moving parts that must fit together in the right way and at the right time for the project to be successful.  These include cost overruns, unfavorable changes in the economy or market by the time the project is completed, taking longer to build than estimated and ending up with a longer than estimated absorption rate.  Absorption rate is the number of units rented per month to reach market occupancy after the project receives its certificate of occupancy.  If any of these are estimated incorrectly, the project can be at risk.

Multifamily Construction Loan Submission List
•    Executive summary highlighting the scope of the project, what you are actually building, supportive data showing your project is needed, and the experience of you and your team
•    Construction costs including hard costs, soft costs, and land value. It’s better to have a line by line itemized budget than an estimate based on square footage.
•    Land value – what you paid for it and when, what you owe on it and what its current value is.
•    Zoning of the land and how far you are with obtaining entitlements
•    Site plan, floor plans and elevation drawings
•    Conceptual Design drawing if you have one
•    A brochure or website for your general contractor and architect, highlighting the projects they have built and their qualifications
•    A brochure or website for your property management company
•    Bio’s or resumes for yourself and other key principals showing multifamily ownership and construction experience.
•    You and your partner’s personal financial statements
•    4 Year Pro-forma showing the projected net operating income from day one of lease up through the first 4 years of operations
•    Pro-forma rent roll
Advertisement