Construction Loans
Century provides construction loans for residential development, including single-family homes, townhomes, apartments, and condominiums.
Construction loans are used to pay for the hard costs (materials and labor) and soft costs (building permits, insurance, property taxes, architectural costs, etc.) of building, as well as to refinance site acquisition and/or predevelopment loans. Construction loans are funded on a progress basis, with funds released after work has been completed. Interest is paid through a reserve set aside from the loan proceeds. Century provides construction loans to both experienced and first-time developers, on terms and using processes that are more flexible than typically available from most commercial lenders.
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Basic Construction Loan Terms |
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Purpose |
The loan will be used for construction costs for the development of affordable rental and for-sale homes, including condominiums and townhomes. |
Loan Amount |
Loans may range between $250,000 and $10,000,000. |
Term |
12 to 24 months. |
Pricing |
Interest rates will be negotiated between the Borrower/Sponsor and Century. Market conditions and overall risk of repayment will determine the loan interest rate, which will be variable based on an index rate (typically LIBOR). Loan fees include origination fees (typically 1.5-2.0%), legal documentation fees, and the costs of third party reports (appraisal, environmental, etc.). |
Repayment |
Construction loans are repaid through the funding of the developer’s equity investment, permanent loan funding, or sales of homes/condominiums. Interest reserves are funded from the loan proceeds to provide debt service during construction. |
Security & Collateral |
Construction loans are always secured in a senior lien position against development site and improvements through a recorded Deed of Trust and Assignment of Rents. Loans may also be full or partial recourse to the development Sponsors. Other collateral, including real estate, may be required to achieve loan-to-value requirements. |
Loan-to-Value & Loan-to-Cost |
A construction loan may have a maximum loan-to-value ratio of 75%, as determined by an appraisal. The maximum loan-to-cost ratio is 80%. |
For more information or to apply for a loan please contact:
Aaron Wooler
310.642.2019
awooler@centuryhousing.org