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Multifamily Financing

Program Guidelines

Overview

CHFA now offers developers a loan program that features an interest rate cap.  Upon adoption of the Loan Resolution, CHFA will commit to a “not-to-exceed” interest rate, allowing developers to benefit from the potential shift in a rising interest rate market. 

The actual permanent interest rate (exclusive of any bond cost of issuance fee) will be locked in 30 days prior to Initial Closing, and will not be higher than this “not-to-exceed” rate. 

To take advantage of this program, applicants must reach Initial Closing within nine months of the Board Resolution adoption. For more information, contact Joe Voccio at (860) 571-3527 or joe.voccio@chfa.org.

 

 

Recent Interest Rates*

Construction Loan TypeRate
2 Years (Tax Exempt)4.290%

Permanent Loan TypeRate
30/30 (Tax Exempt)4.750%
40/40 (Tax Exempt)5.280%
30/30 (Taxable)5.560%

* As of 5/24/2017

* Rates are indications only, are subject to change, and must be verified at the time of rate lock. Above rates assume cost of issuance is paid at closing. See Program Parameters & Fees for more information. Rates are provided solely as a convenience and CHFA assumes no liability for any error resulting from its use.


 

What are my financing options with CHFA?  

CHFA can provide financing for the production and preservation of affordable housing in multiple ways.  CHFA provides both taxable and tax-exempt bond financing for short-term construction loans and long-term permanent loans.  Most commonly, CHFA serves as both the construction and permanent lender in conjunction with a variety of federal and state housing programs.  With CHFA financing, the project pays interest based on the type of loan.  The interest rate on the loan is inclusive of servicing and guarantee fees.


 

How are bond issuance costs paid when financing with CHFA?  

Costs of bond issuance can be paid as a flat fee itemized in the development budget or financed with a small mark-up on the loan interest rate.   

The flat fee option for construction-only financing, permanent-only financing, or construction/permanent financing would be 1.5% of the total loan amount paid at initial closing.  

To finance the cost of bond issuance, CHFA would add 0.25% to the permanent financing rate for both construction/permanent financing and permanent-only financing.  For construction-only financing, the interest rate charge would be 0.75% added to the published construction interest rate.


  

How is CHFA’s financing structured?  

Construction-only financing will be structured so that the construction financing will mature at the end of the construction period.  At maturity, it is anticipated that the construction loan will be retired with the proceeds of permanent financing and/or the proceeds resulting from the sale of low-income housing tax credits, historic tax credits, state historic tax credits or housing tax credit contributions.  

For CHFA’s construction/permanent option, the financing will be structured with two notes: a construction note and a permanent note.  Each note will have its own rate, amount and term.  Starting at initial closing and through the duration of the construction period, the notes will accrue interest based on the construction note rate and the Permanent note rate with no principal amortization.  Interest will be due and payable on a monthly basis and may be capitalized in the development budget.  

Upon final closing at the end of the construction period, the construction note matures and is retired with other development financing or with the proceeds from the sale of tax credits (e.g. LIHTC, Federal/State Historic credit, HTCC, etc.).  At this time, the permanent loan starts amortizing at the rate and term specified in the note.   

Example:   A development with the need of $10,000,000 in construction financing and an anticipated permanent loan amount of $4,000,000 will be structured as follows:  

Construction Note: $6,000,000
Construction Rate: 4%
Construction Term: 2 years (Interest Only)
Permanent Note: $4,000,000
Permanent Rate: 5% (Interest Only for 2 years)  

For the first 24 months, interest accrues @ 4% x the unpaid construction note principal balance AND @ 5% x the unpaid Permanent note principal balance.  On month 24, the construction note matures ($6,000,000 was deposited and used to pay down principal.  Beginning month 25, the Permanent note of principal and interest begins at the specified rate and term.    

For permanent-only financing, CHFA will forward commit the rate and loan for 24 months.  If the loan is not utilized by month 24, the borrower will be required to pay an extension fee.


 

For construction costs, am I able to draw the construction loan first and then utilize the permanent loan?  

No.  All disbursements will be made on a “pari passu” basis.  In the example above, a $1,000,000 draw request would be funded 60% from the construction loan note and 40% from the permanent loan note.


 

How are the loan origination fees and costs of bond issuance calculated on the two-note structure?  

The loan origination fee and the flat fee for costs of bond issuance will be calculated on the combined loan amount and paid at initial closing.  If the cost of bond issuance is financed, the interest rate add-on will be assessed on both the construction and permanent interest rates.


 

If I haven’t received my tax credit equity in month 24 at the construction loan maturity to retire the construction note, are we able to extend the loan?  

At the end of the 24 month period, the permanent loan will be fully drawn and commence amortization.  If the construction is not retired, it may be extended by CHFA.  With this extension, CHFA may elect to assess a $5,000 per month fee until the final closing occurs. 


 

 

How does the new rate-lock option work?

CHFA will commit to a maximum interest rate, or a "not-to-exceed" rate, once the Board of Directors adopts the Loan Resolution.  This "not-to-exceed" rate will be 0.50% higher than the prevailing permanent interest rate on the day the Resolution is adopted.  For example, if the prevailing permanent interest rate at the time the Resolution is adopted is 5.00%, the ultimate permanent rate will not be any higher than 5.50%.  The "not-to-exceed" rate will remain in place for as long as the Loan Resolution is valid, up to nine months after adoption.  The permanent interest rate will be set 30 days prior to the Initial Closing.                                             

The Initial Closing date will only be set once CHFA has received sufficient documentation to demonstrate that a Closing can occur within 30 days.


 

What happens if the borrower cannot reach Initial Closing within 30 days of locking the permanent rate? 

If the Initial Closing does not occur within 30 days of locking in the permanent rate, the borrower will be charged an "Initial Closing Extension" fee equivalent to 0.25% of the Loan Amount.  If the borrower cannot reach Initial Closing within 60 days of locking in the rate, the borrower will be charged a “Rate Reset" fee equivalent to 0.25% of the Loan Amount, and the permanent interest rate will be reset based on the prevailing market rate at the time of the reset.  The "not-to-exceed" rate will be adjusted to the new reset rate.


 

Does the Loan Resolution expire? If so, when?

The Loan Resolution will expire on the last business day of the ninth month following the Loan Resolution adoption.  For example, if a Loan Resolution is adopted on January 29th, 2015, the Resolution will expire on October 30th, 2015.   

If the Initial Closing does not occur on or before the last business day of the ninth month following Resolution adoption, the borrower will be subject to a “Resolution Extension" fee equivalent to 0.25% of the Loan Amount.  The Resolution can be extended one time for up to six (6) months.  Initial Closing Extension fees and Rate Reset fees will apply during the Resolution Extension period.  

If the Initial Closing still does not occur within the Resolution Extension period, the application may be cancelled and voided and the applicant may be required to submit a new application and pay new fees.          

Consideration for extension of the Initial Closing deadline is contingent upon the borrower having satisfied requirements of submission for approval by the State Bond Commission, as applicable.  CHFA reserves the right to waive any program fees resulting from delays beyond the borrower’s control.


 

Additional Information

The following documents are related to Multifamily Interest Rates
Related Documents Found: 6  matches     Displaying: 1 - 6 
FileSizeType
1. CHFA MF Program Parameters & Fees
A detailed summary of the Multifamily Financing program, including terms, conditions and associated fees.
224Kpdf

2. Multifamily Financing Program FAQ
Frequently Asked Questions about CHFA's Multifamily Financing Program
182Kpdf

Legal-1. Commitment Letter
Commitment Letter
265Kpdf

Legal-2. Initial Closting List
Initial Closting List
208Kpdf

Legal-3. Master Loan Documents
Master Loan Documents
1320Kpdf

Legal-4. Final Closing List
Final Closing List
276Kpdf
FileSizeType
Found: 6  matches     Displaying: 1 - 6