Construction
Construction loans
A commercial construction loan is a short-term loan that a lender funds in stages as a project is built, secured by the land and improvements, with an interest reserve inside the loan and a plan to repay it from a permanent loan or a sale. Leverage is set by cost and by as-completed value.
Key facts
Figures as of 2026-10-31. Program rules change by notice, so an advisor confirms current terms with lenders before you rely on any figure.
| Item | Figure | Source and date |
|---|---|---|
| Bank: loan-to-cost | 60%–65% of cost | Corin estimate, varies by lender; as of 2026-10-31 |
| Bank: pricing | SOFR + 2.75%–3.50% | Corin estimate, varies by lender; as of 2026-10-31 |
| Debt fund: loan-to-cost | 65%–75% of cost | Corin estimate, varies by lender; as of 2026-10-31 |
| Debt fund: pricing | SOFR + 4.25%–5.25% | Corin estimate, varies by lender; as of 2026-10-31 |
| Private lender: loan-to-cost | 85%–90% of cost, capped at 70%–75% of as-completed value | Corin estimate, varies by lender; as of 2026-10-31 |
| Corin sizing assumption: max loan-to-cost | 80% | Corin sizing estimate; as of 2026-10-31 |
| Corin sizing assumption: min debt yield on cost | 6.5% | Corin sizing estimate; as of 2026-10-31 |
| Corin sizing assumption: term | 30 months | Corin sizing estimate; as of 2026-10-31 |
How construction loans are sized
Lenders size to the lesser of several tests: loan-to-cost, loan-to-as-completed value, debt yield on cost, and (for income property) debt service coverage at stabilization. The interest reserve sits inside the loan, so it counts toward leverage.
The construction lender, not Corin, funds and administers draws. Corin has no role in draw requests, inspections or lien waivers, and never holds or disburses loan funds.
- Contingency and developer fee are part of the budget lenders review
- Experience tiers: sponsors with a track record of completed projects borrow at higher leverage
- The capital stack can include senior debt, mezzanine, preferred equity, C-PACE and common equity
Lender types
Banks offer the lowest cost and leverage and often require recourse and deposit relationships. Debt funds lend more against cost at higher pricing. Private lenders go highest on leverage, with a cap against as-completed value, and price accordingly.
The takeout
Every construction loan needs a repayment plan. For income property that is a permanent loan sized on stabilized income; for for-sale projects it is sale proceeds. Lenders test the take-out up front, and so do we.
Frequently asked questions
What equity does a construction loan require?
It depends on the lender type. Banks generally require the most equity, and private lenders the least, subject to a cap against as-completed value. The facts table shows typical ranges.
Who handles construction draws?
The construction lender, not Corin, funds and administers draws. Corin has no role in draw requests, inspections or lien waivers, and never holds or disburses loan funds.
Can HUD finance construction?
Yes. HUD 221(d)(4) for multifamily and Section 232 new construction for senior housing finance construction and the permanent term in one insured loan.
Related programs
- Construction-to-permanent loansOne loan that funds construction and converts to long-term debt.
- C-PACELong-term assessment-based financing for qualifying building improvements.
- HUD 221(d)(4)Non-recourse construction-to-permanent debt for new or substantially rehabilitated apartments.
- HUD Section 232FHA-insured, long-term, non-recourse debt for licensed healthcare real estate.
- Construction financingBank, debt fund, HUD and C-PACE options for construction projects.
Talk through your deal with an advisor
Send the basics and a licensed Corin advisor reviews which programs and lenders may fit, or size the loan yourself first.