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Multifamily Construction Loans – 7 Best Programs

Construction Loans - Best Construction Loan Rates

7 Construction Apartment Loan Programs – over 100 Direct Sources

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UPDATED: 11/9/21

 

What Multifamily Construction Loan is the Best Fit for You?

 

This article is designed to help you find the right multifamily construction loan that meets the financial goals that you qualify for. In just a moment I will list the loan guidelines for the top 7 multifamily construction loans in America. Listed will be minimum loan size, loan to cost, loan to stabilized value, and net worth, liquidity and experience requirements for the developer and key principals. Also, whether the loan is recourse or non-recourse.

 

Here is What You need to Know and Have before Applying

  • Executive summary highlighting the scope of the project and the experience of you and your team
  • You construction costs including hard costs, soft costs, and land value.  Its better to have a line by line construction budget than an estimate based on square footage.
  • Land value – what you paid for it and when, what you own on it and what it’s current worth 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

 

Apartment Loan Store has specialized in commercial construction lending since 1997. We do construction loans for: Apartment Buildings, Senior Housing/55 and older Communities, Student Housing, and Independent/Assisted Living Senior Housing.

 

Do You Qualify for a Commercial Construction Loan?

 

Apartment/Multifamily Construction Loan Programs (5 + Units)

 

1. HUD FHA New Construction or Major Rehabilitation – 85% - 87% of Cost, Non-Recourse Construction and Perm Loan

  • Minimum Loan: $5,000,000   Maximum Loan $25M and above

  • 85% of Cost for Market Rate Developments, 87% of Cost for Affordable Housing

  • 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

  • 18 months after completion for absorbtion/stabilization

  • Perm loan rate is locked prior to construction

  • Non-Recourse construction and perm loan

  • No Tax Returns Required

  • FF&E may be financed

  • Draws (average bi-monthly)

  • No minimum Net Worth Requirement

  • Minimal Post Closing Cash Requirement

  • Good Credit Required

 

2. Private Institutional Construction Loan – High LTC. Seamless Roll Over to Perm

  • Minimum Loan $4,000,000, Maximum Loan $50,000,000

  • Loan to Cost: 80%

  • 1 month Libor plus 4.00% to 5.00%  (interest only)

  • Subordinate Mezzanine debt may be allowed up to 90%  CLTC

  • Term up to 36 months

  • DSCR: 1.25

  • Recourse

  • Mini perm not needed

  • Roll over to Fannie Mae or Freddie Mac perm loan

  • Draws bi-monthly to monthly

  • No Pre-payment Penalty

  • Net Worth required equal to the size of the loan for all key principals combined

  • Post closing liquidity requirement:  10% of the loan amount

  • Good Credit Required

 

3. National Bank Program – Lowest Construction Loan Rates, Seamless Transition to Perm Loan

  • Minimum Loan $10,000,000   Maximum Loan $100,000,000

  • Up to 70% Loan to Cost

  • 1 month libor plus 3.00% to 4.00% interest rate

  • Subordinate debt mezzanine loan allowed up to 80% CLTC

  • DSCR: 1.25

  • Term 24 – 36 months

  • Recourse

  • No mini perm needed

  • Roll over to Non-Recourse Fannie Mae or Freddie Mac Perm Loan

  • Draws bi-monthly to monthly

  • Net Worth requirement 1.5 times the loan amount

  • Post closing liquidity requirement equal to 15% - 20% of the loan amount

  • Excellent Credit Required

 

4. Regional Bank Program –  Loan tailored to your needs, great service

  • Minimum Loan $4,000,000,  Maximum Loan: $18,000,000

  • Up to 75% of Cost

  • No subordinate debt allowed

  • Term 24 months

  • 1 month Libor plus 4.00% or prime rate plus 1.00% to 2.00% Interest Rate (Interest only payments)

  • DSCR: 1.25

  • Recourse

  • Usually no mini-perm needed. 

  • Roll over to perm loan of your choise

  • Draws weekly to bi-weekly

  • Net Worth Requirement equal to greater than the loan size

  • Post Closing Liquidity Requirement equal 15% or greater than the loan amount

  • Excellent Credit

 

5. Community Bank Program – Best in Service, Local Construction Monitoring

  • Minimum Loan: $2,000,000   Maximum Loan:  $12,000,000

  • Loan to Cost up to 75%

  • No subordinate debt allowed

  • Term 18 months

  • Prime pluse 1.50% to 2.00% rate (interest only payments)

  • DSCR:  1.25%

  • Recourse

  • Mini-perm available if need for absorption and stabilization

  • Roll over to perm loan of your choice

  • 48 hour draws available

  • No prepayment penalty

  • 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

 

6. Life Company Program –  Very Low Rates, Roll Over to Long Fixed Rate Perm

  • Minimum Loan $15,000,000, No Maximum

  • Loan to Cost up to 70%

  • Subordinate Mezzanine debt may be allowed up to 80% CLTC

  • Term 36 months

  • 1 month Libor plus 2.75% to 3.50%

  • DSCR:  1.20

  • Non-recourse

  • Mini-perm not needed

  • Roll over to very low rate 10, 15, 20 or 25 year fixed rate perm loan

  • Bi-monthly to monthly draws

  • Net Worth Requirement equal to 1.5 to 2 times loan amount

  • Post Closing Liquidity Requirement equal to 20% of the loan amount or greater

  • Excellent Credit Required

 

7. Hard Money Apartment/Multifamily Construction Loan – Easy to Qualify,Fast, Low Documentation, low hassle, Poor Credit Ok

  • Minimum Loan $1,500,000  Maximum Loan $25,000,000

  • Loan to Cost: 75% to 85%

  • Subordinate debt may be allowed

  • Term: 12 – 18 months with extensions

  • Rate: 7.00% to 12.00% interest only

  • Weekly to bi-monthly draws

  • No Net Worth to Loan Ratio

  • Very low Post Closing Liquidity required

  • Poor Credit Ok