Loan Products
| Bridge Loan | Gap Loan | Permanent Loan | |
|---|---|---|---|
| Maximum Term | Up to 12 Months | Up to 24 Months | Up to 240 Months |
| Eligible Borrowers | Nonprofit, for-profits, and government entities, individuals, and LLCs developing eligible properties. | ||
| Eligible Activities | Predevelopment, acquisition, rehab, construction, and permanent | ||
| Affordability Requirements | At or below 80% of Area Median Income with a mandatory affordability covenant up to 20 years | ||
| Security | Must be secured by a note and mortgage or other collateral deemed appropriate by the loan committee, willing to subordinate depending on development feasibility | ||
| Takeout Financing | Written construction or permanent financing commitment required | ||
| Debt Service Coverage | Typically a minimum of 1.20, with a pre-funded operating reserve on permanent loans | ||
| Loan Amounts | • Minimum loan amount of $10,000 • Maximum loan amount typically equal to the greater of $250,000 or 50% of total loan capital, or as otherwise approved by the board |
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| Incentives | Interest rate discounts: • Up to 0.5% for developments at 50% of area median income and below • Up to 1% for developments at 30% of area median income and below • Up to 0.5% for developments that are certified green by LEEDS, Earth craft, Green Communities, or NAHB |
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| Payment | Bridge and Gap Loans: Negotiable. Potentially interest-only through construction; principal and remaining interest due in full upon construction completion. Financing may cover prefunded interest reserve. | Permanent Loans: Equal monthly payments of principal and interest.1 | |
| Origination Fee and Other Fees | Affordability Percentage of Project 51% up to 100% of the units in the project are affordable 26% up to 50% of the units in the project are affordable Up to 25% of the units in the project are affordable (Borrower pays all closing costs and attorneys' fees – lender's and borrower's) | Loan Origination Fee up to 1.5% up to 2.0% up to 2.5% |
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| Security Assurances | Appraisal, environmental assessment, title insurance, liability and flood plain insurance, certificate of occupancy, and inspection | ||
| Interest Rate(s) | Determined by the board. Vary according to source(s) and cost of available funds. | ||
| 1Permanent Loans may also be Construction/Permanent loans where interest only is charged during construction and the loan is then converted to a Permanent Loan with principal & interest (if any) paid monthly for a term not to exceed 240 months unless otherwise approved by the board. |
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