Construction-to-Permanent

One-line summary: A single financing structure that covers both the construction phase and the permanent loan after stabilization, one closing, one set of fees, one rate locked in advance.

Best for

Multifamily developers building new ground-up properties or undertaking substantial rehab projects who want certainty on the permanent loan terms before construction begins, and who prefer to avoid the cost and risk of separate construction and permanent closings.

Key terms (typical)

Attribute	Typical Range
Eligible properties	New construction or substantial rehab; 5+ unit multifamily
Loan amount	$2 million to $50 million+
Loan-to-cost (LTC)	Up to 75% during construction
Loan-to-value (LTV)	Up to 75–80% of stabilized value (permanent phase)
Construction term	18 to 36 months, interest-only with monthly draws
Permanent term	5 to 35 years (depending on program, agency takeouts available)
Rate type	Fixed at closing; some programs offer rate lock during construction
Recourse	Recourse during construction; often non-recourse at conversion to permanent
Conversion	Automatic at stabilization (typically 90% occupancy for 90 days)

Why borrowers choose this program

• Certainty on the takeout. The permanent loan terms are locked at the initial closing, eliminating the risk that rates move against you during the construction period.
• One closing. Single set of closing costs, single set of legal fees, single appraisal process, meaningful savings compared to two separate closings.
• Streamlined draw process. Construction draws are funded by the same lender that will hold the permanent loan, simplifying coordination.
• Recourse releases at conversion. Most programs release the construction recourse when the loan converts to permanent, leaving you with non-recourse long-term financing.

Considerations

• Higher upfront documentation. Construction-to-perm underwriting requires a complete construction package, plans, specs, GMP contract, sponsor experience, market study, at the front end.
• Slower to close than bridge. Construction-to-perm closings typically take 60–120 days. For faster execution, a construction bridge with a separate permanent refinance may be the better path.
• Sponsor experience required. These programs generally require demonstrated experience in ground-up multifamily development. First-time developers may need an experienced partner.