Underwrite the opportunity
We review sponsorship, property performance, business plan, and priorities before approaching the market.
Construction-to-Perm financing
One-Time Close Construction and Permanent Financing Combined
Quick answer: Construction-to-perm loans combine ground-up construction financing and long-term permanent debt into a single closing, eliminating the cost and uncertainty of a two-step financing process. During construction the loan functions as a draw facility; at completion it converts automatically to a permanent term loan. This structure eliminates refinancing risk, reduces closing costs, and locks in permanent financing terms before construction begins. Minimum loan size is $2 million.
NationwideMarket coverage
1,000+Capital relationships
$2MM+CLS engagement floor
24 hoursInitial response
When it fits
When Construction-to-Perm financing fits.
The primary risk in any construction project is not the build itself, it is the refinancing event at completion. Markets shift, rates change, and permanent lenders tighten requirements precisely when developers need them most. Construction-to-perm financing eliminates this risk by locking in the permanent loan at the time of construction commitment. Banks are the primary source for construction-to-perm loans, particularly for multifamily, mixed-use, and owner-occupied commercial projects. Agency lenders including Fannie Mae and Freddie Mac offer construction-to-perm programs for qualifying multifamily projects. The structure is particularly valuable in rising rate environments where locking a permanent rate before construction completion provides meaningful economic benefit.
Structure before pricing: leverage, recourse, reserves, prepayment, and closing certainty can matter as much as the headline coupon. We test those trade-offs before recommending a path.
01
Multifamily developments where permanent financing terms need to be locked at construction start
02
Owner-occupied commercial buildings where stabilization is guaranteed post-completion
03
Mixed-use infill projects in rising rate environments
04
Developers with strong bank relationships seeking to reduce transaction costs
05
Affordable housing developments using LIHTC where certainty of permanent financing is required
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Build-to-suit projects with credit tenant leases signed prior to construction
Lender selection
How We Source Construction-to-Perm Capital
We do not treat the lender list as a directory. We target the desks whose current appetite fits the asset, sponsorship, market, and business plan, then compare the full execution, not only the rate.
| Capital source | Where it may fit |
|---|---|
| Banks | Relationship-oriented capital that can offer local market knowledge and structural flexibility, with recourse often considered. |
| Credit Unions | Relationship-oriented capital that can offer local market knowledge and structural flexibility, with recourse often considered. |
| Fannie Mae / Freddie Mac | Programmatic multifamily or housing capital with defined underwriting, documentation, and eligibility requirements. |
| Life Insurance Companies | Long-duration fixed-rate capital for high-quality assets and experienced sponsors, generally with conservative leverage. |
| CDFI Lenders | Mission-oriented capital that may support eligible communities, sponsors, and projects outside conventional lender criteria. |
How we work
One process. Multiple capital sources.
We position the transaction, identify the lenders most likely to compete, and compare proposals on economics and execution risk, not just headline rate.
A well-structured financing process should create real choices for the borrower, not simply deliver the first term sheet.
Target the right lender desks
The transaction is matched to lenders whose current appetite fits the property, market, and structure.
Create a comparable field
Proposals are evaluated across rate, proceeds, recourse, reserves, prepayment, and closing certainty.
Manage execution through closing
We coordinate lender diligence, third-party reports, and issue resolution until the loan funds.
National reach
Market knowledge where the deal requires it.
We arrange construction-to-perm financing nationwide while matching each transaction to capital sources active in that market and property type.
Atlanta, GABoston, MAChicago, ILDallas, TXDenver, COHouston, TXLos Angeles, CAMiami, FLNashville, TNNew York, NYPhoenix, AZSan Diego, CASan Francisco, CASeattle, WATampa, FL
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Questions
Construction-to-Perm financing, clarified.
The final structure depends on the asset, sponsorship, and market. These are the starting parameters we discuss most often.
Working out equity? Our commercial property down payment guide covers typical requirements by loan type: 20% to 30% conventional, 10% for SBA owner occupied.
A construction-to-perm loan combines the construction facility and the permanent mortgage into a single closing. During the build it funds through draws with interest-only payments. At completion it converts to an amortizing term loan of 10 to 25 years with no second closing, no second set of legal and title costs, and no new underwriting.
Pricing generally runs 6.50% to 10.00%. The construction period is usually floating, while the permanent rate is either set at closing or established through a forward rate lock priced at commitment. Locking early costs a premium in spread or a rate-lock deposit. That premium is what you pay to remove takeout risk from the project.
Conversion is condition-based, not automatic. Typical tests include a certificate of occupancy, completion within budget and schedule, an occupancy threshold often set at 85% to 90%, and a minimum debt service coverage ratio on trailing income, commonly 1.20x to 1.25x. Missing a test pushes the loan into a fee-bearing extension instead of into perm.
A completion guarantee applies throughout construction, and most bank facilities carry full or partial repayment recourse during that period. Lenders typically burn the guarantee down or release it once the project satisfies its conversion tests, leaving a permanent loan with standard carve-outs. Negotiate that burn-off language in the term sheet, not at conversion.
The structure trades pricing for certainty. One closing saves a second origination fee, title premium, and legal bill, and it removes the refinance event that sinks projects when markets move. The tradeoff is permanent terms set years before delivery, usually a touch wider than a perm loan shopped at stabilization. Commercial Lending Solutions prices both structures side by side.
Let's evaluate the right construction-to-perm structure.
Share the property and financing request. We will respond within 24 hours with an initial view.