Construction
Construction-to-permanent loans
A construction-to-permanent loan is a financing structure in which a single loan funds construction and then converts, after completion and stabilization, into a long-term amortizing mortgage, so the borrower closes once and avoids refinancing risk at the end of construction.
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 |
|---|---|---|
| HUD 221(d)(4): term | Construction period plus 40-year | HUD Mortgagee Letter 2025-03 (Jan 2025); as of 2026-10-31 |
| HUD 221(d)(4): market-rate max loan-to-cost / DSCR | 87% / 1.15x | HUD Mortgagee Letter 2025-03 (Jan 2025); as of 2026-10-31 |
| HUD 232 new construction: term | Construction period plus 40-year | HUD Handbook 4232.1 and prior MIP schedule; as of 2026-10-31 |
| HUD 232 new construction: max loan-to-cost / DSCR (for-profit) | 75% / 1.45x | HUD Handbook 4232.1 and prior MIP schedule; as of 2026-10-31 |
| Annual MIP: HUD multifamily | 0.25% | Federal Register 2025-18379 (Sept 23, 2025); as of 2026-10-31 |
| Annual MIP: HUD 232 new construction | 0.77% | HUD Handbook 4232.1 and prior MIP schedule; as of 2026-10-31 |
One closing, two phases
HUD's construction-to-permanent products are the clearest examples: the borrower closes one insured loan, construction funds are released by the HUD lender under HUD oversight, and the loan converts to a long fixed amortizing term at completion. Corin has no role in the draw process.
Banks also offer construction-to-perm structures, usually with a shorter permanent term and often a rate reset at conversion.
Trade-offs against two-step financing
One-step financing removes refinancing risk and locks pricing early. Two-step financing, with a bank construction loan followed by a separate permanent loan, usually closes faster and offers more flexibility, but exposes the borrower to rate and credit conditions at takeout.
- HUD: higher leverage and fixed long-term debt, longer processing, more compliance
- Bank construction-to-perm: faster, shorter term, often recourse
- Two-step: flexible, but takeout risk stays with the borrower
Frequently asked questions
Which asset types use HUD construction-to-permanent loans?
Multifamily rental housing through 221(d)(4) and licensed healthcare facilities through Section 232 new construction.
What is the main risk of two-step financing?
The permanent loan has to be available and large enough at completion. If rates, values or lease-up disappoint, the borrower may face a shortfall.
Who manages draws on a construction-to-permanent loan?
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.
Related programs
- Construction loansGround-up and heavy-renovation financing from banks, debt funds and private lenders.
- 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.
- C-PACELong-term assessment-based financing for qualifying building improvements.
- 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.