What Are Current Commercial Construction Loan Rates?

photo of new commercial construction

Commercial construction loan rates are higher than permanent commercial loan rates because of the additional risks involved.

Lenders also charge higher rates on construction loans in order to provide incentive for borrowers to finish construction projects on time.

Your construction financing rates will depend upon many factors including:

TYPE OF LENDER – Construction loan lenders vary from conventional and SBA to HUD and commercial hard money.

DEVELOPMENT EXPERIENCE – This simply means the strength and experience of the borrower.

TAKE-OUT COMMITMENT – The ability of the construction loan take-out lender to fund.

The quickest way to find today’s current commercial construction loan rates is to determine which type of lender will fit you best. I have provided the following list of construction loan lender rates to help you with your search:


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PRIME (3.50%) + 1% to 3%*

Commercial banks and credit unions currently offer construction loan rates that start at Prime Rate +1%.

These can be interest-only construction loans, with loan-to-values of up to 75% and offered for development of all types of commercial properties.


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SBA 504 & 7a

PRIME (3.50%) + 1% to 2%*

SBA construction loans provide commercial construction financing up to 90% loan-to-value.

The SBA 7 (a) loan is currently near 6% while the CDC/504 which is often used for multifamily property construction, caps out around 4.5% depending upon certain qualifications.

The SBA 504 also allows borrowers to finance construction costs such as surveys, interim construction interest and development fees.




Fixed-rate set by HUD*

HUD and FHA construction lending rates are low, fixed-interest rates that cover construction to permanent loan financing.

These construction loans are available for new multifamily and apartment construction projects as well as substantial rehab financing.

The 221 (d) (4) construction loan is the only 40 year, non-recourse construction mortgage available.




2% – 6%*

EB – 5 construction financing rates usually start around 2% and normally top out around 6%.

These rates are obviously very attractive for real estate developers but obtaining EB-5 funding can be a long and difficult process.

This form of mezzanine construction loan financing can take over 12 months to fund is often subject to escrow.


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12% – 18%*

Hard money construction loan rates are currently between 12% to 15% but can rise up to 18% in some cases.

Hard money lenders can provide the much needed bridge financing to construction perm when more conventional construction lenders can’t.

You will also be charged between 2 to 10 points depending on your financial strength and how fast you need to close your construction loan.



Current commercial construction loan rates are at historically low levels.

The improving economy and rising commercial real estate values have led to greater competition between all types of construction loan lenders.

This also means commercial construction lenders are easing construction loan lending standards in an attempt to gain your business.

And while many worry that the best days for construction loan rates are behind us (with the Fed beginning to raise rates), for now, you can still enjoy lower rates on everything from new hotel construction to multifamily property rehab.

* The above rates are meant for general guidelines only. Current commercial construction rates are subject to daily changes and can vary greatly from one construction lender to another.

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