Multifamily Construction Loans
FHA Apartment Construction Loans 3.240% – 3.640% Fixed 40 Years Get Confidential Loan Quote ›
Fannie Mae 5 Year Adjustable Rate Multifamily Loans 2.773% Get Confidential Loan Quote ›
Apartment Refinance Loans 3.150% Fixed 35 Years Exclusive Apartment Loans Refinance Offer ›

Multifamily Construction Loans

The Only 40 Year, Fixed Rate Multifamily Construction Loans In The World

Having the ability to offer multifamily construction loans that convert into permanent loans at the end of construction sets us apart. It’s also one of the reasons we focus on GSE lending. They are also the reason we are advocates of FHA multifamily construction loans. With very few exceptions, FHA 221d4 multifamily construction loans are the only multifamily construction loans we place.

The typical financing structure for multifamily construction loans includes multiple loans and multiple closings. It also means means multiple sets of fees. First, you would have a multifamily construction loan and closing for the interim construction loan. During the next 18-24 months you’ll arrange a permanent mortgage. It will take a great deal of time and money. When construction is finished, you’ll have another closing and another set of fees to close your permanent mortgage. It’s very possible that your permanent loan had a 30 year amortization period, but a 5 year term to force a slightly lower interest rate. So, five years from now, you’ll be repeating the process all over again.

That’s three closings, three origination fees, three appraisal fees, three title policies plus incidental fees and expenses and a great deal of time and aggravation in seven years.

Compare the typical multifamily construction financing structure to an FHA multifamily construction loan. The first closing is nearly identical. That’s it. No more fees. The first closing created a 40 year, non-recourse, fixed-rate, multifamily construction loan that converts automatically at the end of the construction period to a 40 year fixed rate apartment loan. The 40 year term starts at the end of construction. You avoid multiple loan closings and duplicative fees with FHA multifamily construction loan.

Additionally, the FHA multifamily construction loans we place will likely allow for slightly more leverage and FHA multifamily construction loans almost certainly offer mortgage rates that are half to a full point lower than other alternatives.

Request a confidential loan quote today and we’ll arrange multifamily construction financing that will make your deal more successful.

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Some Of The Most Competitive Multifamily Loans In World
Get Confidential Loan Quote today and see how the right loan can make your deal more successful

FHA Multifamily Construction Loans Terms Sheet

Loan Program
FHA 221d4 Multifamily Construction Loans
Loan Purposes
The 221(d)(4) multifamily construction loan program provides construction financing for the construction or substantial rehabilitation of detached, semi-detached, row, walkup, or elevator-type rental or cooperative multifamily housing containing 5 or more units. FHA Construction to Permanent Loan Program available for market rate apartments or properties with rental assistance.
Eligible Properties
Conventional market rate apartments, cooperative housing and multifamily affordable housing properties with 5 or more units.
Eligible Borrowers
Both for-profit and non-profit entities are eligible.
Minimum Loan Amount
Minimum loan amount new construction $25 million.
Minimum loan amount substantial rehab $5 million.
Maximum Loan Amount
  1. Percentage of eligible development cost, including as-is value of land for new construction or as-is value of property in the case of substantial rehabilitation:
    • 83.33% for market rate apartments.
    • 87% for affordable apartments.
    • 90% for apartments with 90% or greater rental assistance.
  2. An amount that achieves minimum Debt Service Coverage Ratio:
    • 1.20×1 DSCR for market rate apartments.
    • 1.15×1 DSCR for affordable apartments.
    • 1.11×1 DSCR for apartments with 90% or greater rental assistance.
  3. FHA statutory per unit limits adjusted for local high cost factor;
  4. Cost of offsite improvements, FF&E, marketing, construction contingency and operating deficit reserve are excluded from loan amount.
Loan Term
Actual construction period plus 40 years, fully amortizing, interest only during construction.
Amortization Term
Actual construction period plus 40 years self amortizing.
Loan To Value Ratio
  • 83.33% for market rate apartments.
  • 87% for affordable apartments.
  • 90% for apartments with 90% or greater rental assistance.
Debt Coverage Ratio
  • 1.20×1 for market rate apartments.
  • 1.15×1 for affordable apartments.
  • 1.11×1 for project based rental assistance apartments.
Prepayment Terms
Loans may be voluntarily prepaid subject to a two-year lock out followed by an annual step down premium 8%, 7%, 6%, 5%, 4%, 3%, 2% and 1%.
Personal Liability
FHA apartment loans are non-recourse, with standard carve-outs.
Accrual
Actual/360
Escrow Requirements
  1. Replacement reserves required in accordance with HUD guidelines;
  2. Taxes and Insurance escrowed monthly (post construction);
  3. Working Capital Reserve equal to 4% of loan amount (post in cash or LOC);
  4. Operating Reserve 3% of loan amount or greater as determined by HUD at commitment.
Third Party Reports
  1. Appraisal
  2. Phase One Environmental Assessment (ESA)
  3. Market Study
  4. Construction Cost Review
  5. Plans and Specs Review
Rate Lock
30 to 180 day interest rate lock commitments. An early rate lock feature is available, allowing the borrower to lock a rate after preliminary underwriting.
FHA Application Fee
0.3% of the loan amount due at application (1/2 due at Pre-application and 1/2 due at Firm Application)
FHA Inspection Fee
.5% of the loan amount due and payable at closing.
Loan Origination Fee
Minimum 1.00%, thereafter negotiable based on complexity of the transaction.
Replacement Reserve
At Initial Endorsement the funding of a replacement reserve account will occur and periodic payments will be paid to it after Final Endorsement.
Additional Loan Features
  • Maximum underwritten occupancy 93% for market rate, 95% for rental assistance
  • Pre-review is required by HUD
  • Davis Bacon prevailing wage requirements apply
  • Cost certified audit required at Final Endorsement
  • Bonded general contractor is required
  • A replacement reserve will be funded at closing
  • Annual audit of operations is required
  • Hard second liens not allowed, soft seconds & stock pledge financing allowed with proper structure
Confidential Loan Quote Request
Some Of The Most Competitive Multifamily Loans In World
Get Confidential Loan Quote today and see how the right loan can make your deal more successful

Multifamily Loan Case Studies

Fannie Mae Multifamily Affordable Housing Loan Houston Texas
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Fannie Mae Multifamily Affordable Housing Loan

Provided $9,300,000 Fannie Mae multifamily affordable housing loan for Class C apartments in Houston Texas.

Fannie Mae apartment loan Texas for Concord At Little York apartments
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Fannie Mae Apartment Loan Texas Case Study

Originated $13,000,000 Fannie Mae apartment loan Texas for Concord at Little York apartments Houston Texas.

FHA Apartment Loan Arizona Starrview at Starr Pass
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FHA Apartment Loan Arizona Starrview at Starr Pass Tuscon

Refinanced FHA apartment loan in Arizona with FHA 223a7 for Starrview at Starr Pass in Tuscon Arizona

FNMA Affordable Housing Finance LIHTC Houston Texas Shoreham Apartments
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FNMA Affordable Housing Loan LIHTC Tax Credits Houston TX

Combined LIHTC tax credits with $3,600,000 FNMA affordable housing loan for Houston multifamily project.