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CONSTRUCTION LOAN

A construction loan is a type of short-term loan specifically designed to finance the construction of a new building or significant renovations to an existing property. Unlike a traditional mortgage, which is used to purchase an already-built home, a construction loan provides funds in stages as the construction progresses.

 

The loan is fixed or variable for up to 3 years with interest-only amortization. The loan is due at the end of the 1 to 3-year term. No prepayment penalty in most cases. Eligible properties include multifamily 5+ units, 1-4 unit residential, condos, office, retail, industrial, manufactured housing, self-storage, hotels, and healthcare.

 

Construction Loans are short-term interim loans designed for new construction and major rehab projects before securing long-term financing or disposition.

Required Documents for Loan Review

  • Sponsor resume/track record

  • Sponsor personal financial statement

  • Project scope of work/budget

  • Builder resume/track record

Loan Criteria

Leverage:

 

Ground-Up: Max ARV: 65% | Max LTC: 80% | Build Cost:100% | Min Credit: 650

Rehab: Max ARV: 75% | Max LTC: 85% | Build Cost: 100% | Min Credit: 650

Rate:

The starting rate a Prime + 2%. Rates are project-specific and heavily based on sponsor experience.

Loan Amount:

 

Ground-Up: $250K to $100MM+

 

Rehab: $150k+

Reserve account:

A reserve account will be used to make monthly payments on behalf of the Borrower until the construction phase is finished and the property is ready for take-out financing.

Occupancy:

Owner-occupied residential developments, investment properties, commercial owner-user.

Property Type:

Most property types are considered. Multifamily, office, retail, industrial, mixed-use, specialty use, 1-4 unit residential.

Liquidity:

Minimum 10% of project budget + minimum 6-months interest reserves

Property Type:

Most property types are considered. Multifamily, office, retail, industrial, mixed-use, specialty use, 1-4 unit residential.

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