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There are Encouraging Signs, But No Clear Direction…Yet
Long-term rates have been rising since their recent lows in September. The bond market is reacting to uncertainty – uncertainty about inflation, jobs, tariffs, tax
FHA-insured financing for multifamily new construction loans offers borrowers several advantages, including:
FHA loans up to $120 million are generally sized to the lesser of two amounts based on one of the following criteria:
The loan amount is based on 85% of FHA-recognized costs, including construction costs, land value, and most soft costs, along with an allowance for developer fees and builder profit.
There is a third test based on statutory limits – programmatic maximums adjusted for local market conditions. Statutory limits generally come into play only in high-cost markets or for high-cost projects. There is no loan-to-value test on new construction.
Interest rates on FHA-insured loans are fixed just before closing and remain fixed at that same rate through construction and for the life of the loan. An FHA-insured loan for new construction is a single loan with up to 24 months for construction (consistent with the term of your construction contract) and a full 40-year term after construction. As a single loan, there is no conversion or “hurdle” to the permanent loan (that is, no occupancy or debt service coverage tests), though an audit of project development costs is required.
FHA-insured loans are fully non-recourse, subject to certain “carve-outs” such as fraud, theft of funds, or unapproved transfers of ownership interests. These carve-outs do not change the non-recourse nature of the loan but do require that a key individual accept personal liability for these “bad boy” acts.
The tests for loans greater than $120 million are 1.30 debt service coverage and 75% loan-to-cost.
Long-term rates have been rising since their recent lows in September. The bond market is reacting to uncertainty – uncertainty about inflation, jobs, tariffs, tax
For the fourth consecutive year, AGM Financial Services (AGM) donated a total of $100,000 to four Baltimore nonprofit organizations. Recipients will receive a $25,000 unrestricted grant that
In November, we told you about two proposed changes to FHA underwriting meant to increase multifamily production. Now it’s official. Late yesterday, HUD announced changes
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