SBA 504 Commercial Loans

Apartment Construction Loans Multifamily Construction Mortgages


Commercial Loan Direct offers two apartment construction loan programs:


Loan Type Min Loan Amount *Property Type Max LTV Term Length Amortization Rates
FHA Apartment Construction Loans A, AH, C, H, MC, SH, SNF $3,000,000 83.3% 35-40 Years 35-40 Years
Conventional Construction Loans A, I/W, M/H, MU, O, R $1,000,000 80% 3-15 Years 15-30 Years
*A = Apartment AH = Affordable Housing C = Cooperative H = Hospitals MC= Memory Care SH = Senior Housing SNF= Skilled Nursing Facilities H/M= Hotel/Motel I/W = Industrial/Warehouse M/H = Medical/Healthcare MU = Mixed Use O = Office R = Retail SS = Self-Storage

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.

FHA Multifamily Construction Loans
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.
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.

Conventional MF Construction Loans

This product is offered through our network of national, local, and regional community banks. We obtain bids and execute only with reputable financial institutions with which we had a positive track record. When arranging this type of financing CLD typically requires a first option to provide financing for the permanent take out loan.

Conventional MF Construction Loans
Maximum Loan Amount: Up to $50 Million
Pricing: Prime + 1.75% (during construction phase - * can take out and fix rate upon stabilization)
Origination Fee: 1%
Liquidity requirement: Typically 7-10% of the loan amount (post closing)

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