Fannie's Multifamily Affordable Housing and Freddie's Targeted Affordable Housing programs offer construction-to-perm and bond execution for qualifying affordable deals. Market-rate ground-up construction typically uses bank construction loans or HUD 221(d)(4) , the agencies do not have a market-rate ground-up construction program.
What does HUD 221(d)(4) offer market-rate construction?
Forty-year amortization, non-recourse, fixed-rate execution that combines construction and perm in a single closing. Process is slower (12 to 18 months) and requires Davis-Bacon prevailing wages, but cost of capital and structure are unmatched on long-hold market-rate multifamily construction.
Where do banks and debt funds fit?
Most market-rate construction projects use bank construction loans (at 60 to 65 percent loan-to-cost with completion guarantee) or debt-fund construction loans (at 70 to 80 percent loan-to-cost with non-recourse). Take-out at stabilization typically uses Fannie or Freddie permanent execution.
Sources
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current
- Optigo lending program disclosures · Freddie Mac Multifamily · current
- Multifamily Accelerated Processing (MAP) Guide · U.S. Department of Housing and Urban Development · current