Multifamily Construction Loans
Multifamily construction financing options vary greatly, and include HUD 221(d)(4) loans, which have 40-year, fully amortizing, non-recourse terms, as well as bank, hedge fund, and life company loans.
Multifamily & Apartment Construction and Development Financing
Financing for the construction of a multifamily asset comes in many forms. HUD is often the most popular choice for apartment construction loans, offering the most competitive fixed-rate, fully amortized, high-leverage, non-recourse financing through the HUD 221(d)(4) program.
Bank loans for construction are available for most commercial property assets — including mixed use, office, retail, industrial, and more. These loans also allow investors to take finished/stabilized assets and recapitalize once the project is complete with a cash-out refinance or sale — often with limited or no prepayment penalty.
CMBS lenders typically offer unlimited cash out of up to 80% LTV depending on the particular scenario. For commercial properties, life companies and banks offer comfortable permanent financing options with some level of recapitalization or earn-outs.
If you’re looking for a multifamily and apartment construction loan, fill out the form below to speak with a specialist to get your free quote.
Sample Construction Loan Terms for Multifamily and Commercial Properties in 2025
Size | Generally $2 million and up |
Amortization | Up to 40 years fixed and fully amortizing (with HUD FHA 221(d)(4)) |
Maximum LTC | 75% (87% with HUD for market-rate properties) |
Rate | Varies; loans generally consist of floating-rate, interest-only financing |
Maximum LTV | 75% (87% LTV with HUD 221(d)(4)) |
Minimum DSCR | 1.20x (1.15x with HUD for market-rate properties) |
Multifamily Construction Loan Considerations
HUD loans are available for market-rate properties (not just affordable properties).
HUD loans are non-recourse, including during the construction period.
Fixed rates available for construction and permanent financing with HUD.
1.11x DSCR for affordable housing projects with HUD/FHA 221(d)(4).
Small bank loan (under $4 million) rates start at Prime + 1.50%.
Bank loans are generally full recourse during the construction period, with some offering burn-off options after c/o and stabilization.
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