Multifamily Construction Loans.
Commercial Loan Direct Offers two apartment construction loan programs:
FHA Multifamily Construction Loans.
Commercial Loan Direct provides FHA-insured, long-term, fixed-rate financing for new construction apartments or substantial rehabilitation of multifamily projects nationwide. Commercial Loan Direct uses the two-stage Multifamily Accelerated Processing Program (MAP) to expedite underwriting and approval.
- Loan Term: Construction loan plus up to 40-year permanent loan
- Amortization: Up to 40 Years
- Maximum Loan Amount: Determined by the lowest of:
1. 90% of total eligible development costs
(100% for non-profit)
2. 1.11 debt service coverage
(1.05 for non-profit)
3. HUD’s statutory mortgage limits
4. For rehab add 90% of the “as is” value
(100% for non-profit) plus 90% of the total development cost (100% for non-profit) - Fixed Rate: Yes - Construction and Permanent
- Eligible Property: Multifamily projects to be built or projects
undergoing substantial rehabilitation. Detached
structures and row houses eligible. - Eligible Borrower: Single Asset Entity (for profit or non-profit)
- Occupancy Requirement:
Underwritten at a maximum 95%
occupancy - Tax and Insurance Escrows: Monthly deposits required
- Recourse: Non-recourse - Construction and Permanent
- Commercial Space: Maximum 10% of gross floor area and maximum 15% of potential gross income
- Required Reports: Market Study, Appraisal, Architect/Cost Review, and Phase I
- Prepayment:
Negotiable. Generally three year lockout with
declining percentage of principal thereafter up to 10 years (7-6-5-4-3-2-1). - Assumable: Subject to Lender and HUD approval and payment of assumption fee
- Good Faith Deposit: Negotiable based on project type
- Expense Escrow: Yes - sufficient to cover Lender’s expenses and third-party report costs
- Origination Fee: Yes
- HUD Application Fee: Non-refundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD with the firm commitment submission package.
- HUD Inspection Fee: 0.5% of the mortgage amount for new construction. 0.5% of the cost of the repairs for substantial rehab.
- Legal/Closing Fee:
Borrower pays Lender ’s legal fee and
miscellaneous closing costs. - Rehabilitation Qualifications: Repairs must exceed $6,500 per unit (adjusted for local high cost factor), 15% of the “as rehabbed” appraised value or replacement of 2 or more major building systems.
- Davis Bacon: Davis Bacon labor standards and wage requirements apply to construction and rehab work.
- HUD Mortgage Insurance Premium (MIP): HUD sets the cost of the FHA Insurance. The MIP is paid in advance for the construction period and is escrowed monthly after amortization commences.
FNMA Multifamily Construction Loans
Forward Commitment Program (Market Rate or Affordable Housing) Commercial Loan Direct’s Forward Commitment product provides flexible options for securing permanent financing terms prior to or during construction/substantial rehabilitation of multifamily projects. Developers can finance both construction and permanent loans through one application process in conjunction with qualified construction lenders.
- Loan Amount: $2,000,000 minimum
- Forward Commitment Term: Up to 30 months with a six-month extension option (subject to approval)
- Loan Term: 7 to 30 years
- Amortization: Up to 30 years
- Minimum DSC: For variable rate 1.15 for Affordable Housing 1.25 for Market Rate. For fixed rate 1.20 for Affordable Housing 1.30 for Market Rate
- Maximum LTV: 90% for Affordable Housing. 80% for Market Rate
- Fixed Rate: Yes
- Adjustable Rate Available. Priced off the one-month or three-month LIBOR. Convertible options only.
- Eligible Property: Multifamily, minimum five units
- Eligible Borrower: Single-asset entity
- Occupancy Requirement: 90% physical occupancy
- Tax and Insurance Escrows: Monthly deposits required. May be waived if certain criteria are met.
- Replacement Reserves: Underwritten at a minimum $150 for Market Rate deals, $200 for Affordable Housing (MAH) per unit annum. Monthly deposits may be waived if certain criteria are met.
- Recourse:
Non-recourse. Standard exceptions for fraud
and misrepresentation can be waived for 100% restricted
properties. - Commercial Space: Maximum 20% of net rentable area and maximum 20% of effective gross income
- Required Reports:
Appraisal, Market Study, Architect Review of
Plans, Soils Report and Phase I - Prepayment: Yield maintenance or defeasance on permanent loan
- Assumable: Yes
- Supplemental Loans: Eligible for secondary financing 24 months after closing of the permanent loan
- Pricing:
Tiered Pricing Matrix. More favorable terms available for
higher DSC and lower LTV. - Rate Lock: Available using Letter of Credit or Guaranteed Investment
- Application Deposit: $15,000. Covers all estimated underwriting costs (including processing fee).
- Processing Fee:
$3,000 non-refundable
Origination Fee: Yes - Legal / Closing Fee: Fees for legal and Fannie Mae Counsel will be determined at application
- Good Faith Deposit: 2% of loan amount, refundable at permanent loan closing
In its prequalifying review, Commercial Loan Direct will attempt to estimate both the loan amount and the fees and costs associated with the apartment construction mortgages. Actual loan amounts and actual fees and expenses may vary from the prequalifying estimates. A prequalifying estimate is not a commitment to make a loan.