Multifamily & Mixed Use
Construction & Substantial Rehab Loans
Term: 42 years, 2 years interest only, construction loan PLUS 40 year fully amortizing permanent loan.
LTC: 80% - 90%
90% LTC with 1.11X DSCR (Subsidized Housing)
87% LTC with 1.15X DSCR (Affordable Housing
85% LTC with 1.18X DSCR (Market Rate)
80% LTC with 1.25X DSCR (Subsidized & Affordable)
Loan Amount: $10 million +
Lending Area: USA
Program: FHA-HUD 221 (d)(4)
Property Type: Apartments, Mixed-Use, Affordable Subsidized housing and non-dedicated student housing (up to 25% of net rentable area and 15% of gross income may be commercial)
Fees: Our fee is built into the interest rate
Finance new building construction and major renovation of existing buildings where:
a) Renovation $15,000 + per unit times local cost factor (typically 190% to 270%)
b) Renovation 50%+ over 2 building systems (electrical, plumbing, mechanical, building envelope & structural)
Upfront Fees: NO upfront fees underwriting pricing and sizing loans
NO application or 3rd party fees (such as appraisals) until borrower signs FHA-HUD, Fannie Mae or Freddie Mac term sheet
Rate Locks: 2 months before funding; can rate lock early by paying a one time, nonrefundable payment of 3 to 6 BPS per month (borrower chooses # of months to rate lock)
Borrower: Must have experience in the last 3 years on title building or major rehabbing similar projects(s)
Borrower Liquidity: Must cover "cash to close" (combined for all key principals)
Contractor: May hire HUD approved general contractor to build project but there must be someone on title and organization chart with multifamily experience with similar sized project(s)
Title: Must close in a single asset, special purpose LLC, corporation or partnership
1) Must accept student and non-student tenants
2) 12 month leases
3) Leased per unit not per bed and
4) rental rates must be comparable to non-student apartments in the area.
1) Before construction, reserves for interest, taxes, insurance, working capital (2 to 4% of loan amount) and initial operating deficit; balances released to borrower after 6 consecutive months of break-even operations
2) Post construction: taxes, insurance & monthly mortgage insurance premium and capital needs reserve with monthly deposits by HUD guidelines
Mortgage insurance premium: 0.65%
(0.70% for urban renewal projects) 0.25% to 0.35% for affordable & subsidized properties
0.25% for Energy Star certified properties; amounts due during construction term paid at closing).
HUD Application Fee: 0.15% of loan amount due with initial application; plus 0.15% with final application (entire 0.30% due with final application for affordable and subsidized properties). Applicaton fees are lower for properties in opportunity zones.
Third Party Reports: Appraisal, market study, environmental & future capital needs assessment plus review of final construction and architectural docs by HUD approved 3rd party contractor.
Timeline: 12 months from due diligence to closing