Question:

What is a good commercial construction loan LTV?

Answer:

Why would lenders agree to a commercial construction loan LTV of 100%? After the completion of the construction project, the new appraised value may be much higher than the original appraised value of the project.

Consider an office building that cost $60 million to build. Upon completion, the appraiser stated the building was worth $100 million. That makes a construction loan LTV of 60%, which is a great LTV.

What is a reasonable commercial construction loan LTV on today's market?

No matter what type the commercial construction project is, LTV is rarely over 75% - for apartment and retail buildings, hotels and industrial projects. Lenders are particularly cool to office towers in central locations and assisted living apartment buildings, located anywhere.

With a commercial construction loan, you want an LTV of 75, or at least 20-25% for the project to appraise out. If it doesn't, you may like to get a mezzanine loan. Those are equity loans secured by the stock of the company in ownership of the construction project.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
Why: Find your next home and save money.
Link: Search thousands of foreclosures. Free 7-day trial.
Link this QnA Print del.icio.us Digg
Was this Mortgage QnA helpful?
Not at all
  • Currently 3.6/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
 Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA:

Common misspellings: mortage and morgage