Apartment Building LoanCredit Cards and LoansApartment building loan...in general, this refers to construction loans for properties containing more than four units. The reason for this cutoff is that "normal" Fannie Mae and Freddie Mac loans are allowed to go up to but not beyond four units. That makes everything above four units a "commercial loan" by definition. If your project is for four or fewer units, you're better off looking for a regular construction loan from any run of the mill residential loan company. If, on the other hand, you are looking for a real apartment building loan - one for more than four units, then you are looking for a commercial loan, sometimes referred to as a "major loan". Any large lender who does both normal residential loans and "major loans", has two completely separate departments for these two kinds of loans. One problem you will run into right away with commercial loans is the LTV allowed. You will never find a commercial or "major loan" permitting an LTV beyond 85%. This restriction alone may be the primary reason why four-plexes are so common and five-plexes are essentially non-existent. As with other types of loans, the commercial lending arena is composed of a "food chain" consisting of "hard money lenders" who actually have investment capital to loan out, followed by "loan originators", who set up new loans and then "sell them" to hard money lenders", and finally an array of loan brokers and affiliates who merely find loan business and "sell the customer" to a broker or hard money lender. The further up this chain you go, the less you will pay in fees and the better your rate will be. Look for a hard money lender for your apartment building loan.
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