Miami · Miami-Dade County, Florida · Updated September 2026
Ground-up multifamily and mixed-use in Miami is funded by five kinds of lender, not one. Which one says yes depends on a federal capital rule most borrowers have never heard of, and on whether your paperwork was recorded in the right order.
By Michael McGovern, Founder | 25+ Years in Commercial LendingCommercial Mortgage Connection · Lending in all 50 states The short answer
A Miami construction loan for ground-up multifamily or mixed-use comes from one of five places: a regional or community bank, a private debt fund, an FHA-insured HUD program, a bank loan stacked with C-PACE and mezzanine money, or a single balance sheet such as a family office. Commercial banks are the cheapest and the slowest. Debt funds are the fastest and the most expensive. Which one will actually fund you is decided less by your rate shopping than by two things: how much cash you can leave in the deal, and whether the project is entitled and permitted.
- The cash test is a federal rule, not a preference. Bank capital rules push lenders to require contributed equity of at least 15 percent of the as-completed value before the first dollar is advanced.
- The rule is measured against value, not cost. A more profitable project can be required to put in more cash, not less.
- The money arrives in draws, behind inspections, lien waivers and title updates, never as a lump sum at closing.
- In Florida, recording order decides lien priority. Work that starts before the mortgage is recorded can put a contractor ahead of your lender and stop the closing.
Every rate, fee and dollar figure below is a labeled example or a typical market range checked 29 September 2026. None of it is a quote, an offer, or a commitment to lend. Call 888-656-9812 to talk through your own numbers.
What this page covers
- Who finances ground-up construction in Miami
- Why your bank wants 15 percent, and where that number comes from
- What a Miami construction loan actually looks like
- How the money reaches you: the draw schedule
- What Miami adds that other markets do not
- The Florida recording trap that kills closings
- What a construction lender will ask you for
- When ground-up does not pencil
- How CMC places a construction loan
- Miami construction loan FAQ
Who finances ground-up construction in Miami
Ground-up is the hardest money in commercial real estate to raise, because the lender is underwriting a building that does not exist. There is no rent roll, no operating history and no appraisal of a standing asset. Everything rests on plans, a budget, a contractor and a sponsor. That is why the lender list is short and why each type of lender wants something different from you.
Five sources fund the overwhelming majority of ground-up multifamily and mixed-use in South Florida.
| Source | Typical leverage | Speed to close | What it really wants |
|---|---|---|---|
| Regional and community banks | 60 to 70 percent of cost | 60 to 120 days | A sponsor with a balance sheet, a completion guaranty, and often a deposit relationship. Cheapest money, most conditions. |
| Private debt funds and bridge lenders | 65 to 80 percent of cost | 30 to 60 days | Collateral and exit. Underwrites the project more than the sponsor, and prices that speed accordingly. |
| HUD and FHA insured, Section 221(d)(4) | Up to 85 percent of cost on market-rate deals | 9 to 18 months | Patience. Non-recourse, fixed rate, and a construction loan and permanent loan in one. The timeline is the price. |
| Bank senior plus C-PACE and mezzanine | 75 to 85 percent combined | 90 to 150 days | An intercreditor agreement the senior lender will sign. Fills the gap the senior will not. |
| Family offices and single balance sheets | Negotiated | As fast as they decide | A relationship, or a share of the profit. No committee, no template, no certainty. |
Notice what is missing from that list. The national money center banks do very little ground-up lending on mid-size projects, and the agencies do not lend on construction at all. Fannie Mae and Freddie Mac finance stabilized apartments, which is your take-out, not your build.
That distinction matters when you are planning. Your construction lender and your permanent lender are usually two different institutions, and the exit has to be credible before the first one will fund. The exception is HUD 221(d)(4), which combines both into a single insured loan, and pays for that convenience with a timeline measured in quarters rather than weeks.
Why your bank wants 15 percent, and where that number comes from
Almost every sponsor who shops a bank construction loan hears a version of the same sentence: we need to see more equity. It sounds like negotiation. It is not. It is a capital rule, and knowing the rule changes how you structure the deal.
Federal bank capital regulations define a category called high volatility commercial real estate, or HVCRE. A loan that finances the acquisition, development or construction of real property falls into it by default, and an HVCRE exposure carries a 150 percent risk weight instead of the normal 100 percent. In plain terms, the bank has to hold half again as much capital against your loan, which makes your loan less profitable for them.
There is a way out, and it has conditions. To be excluded from HVCRE, the loan generally has to sit at or below the supervisory loan-to-value limit, and the borrower has to contribute capital of at least 15 percent of the property's as-completed value before the bank advances funds. That capital then has to stay in the deal until the facility converts to permanent financing or is repaid.
Read the second condition again, because this is where sponsors get caught. The 15 percent is measured against as-completed value, not project cost. Most borrowers assume equity is a percentage of what they are spending. The rule ties it to what the finished building will be worth.
| Item | Loan at 80% of cost | Loan at 75% of cost |
|---|---|---|
| Total project cost | $24,000,000 | $24,000,000 |
| As-completed value | $40,000,000 | $40,000,000 |
| Construction loan | $19,200,000 | $18,000,000 |
| Sponsor equity | $4,800,000 | $6,000,000 |
| Equity as a share of as-completed value | 12.0% | 15.0% |
| Meets the HVCRE exclusion test | No | Yes |
| Extra cash required | $1,200,000 to move from the first column to the second | |
Here is the counterintuitive part. The stronger your projected value, the larger the cash requirement gets, because 15 percent of a bigger number is a bigger number. A sponsor who walks into a bank proud of a $40,000,000 valuation on a $24,000,000 build has just raised their own equity bar.
None of this applies to a private debt fund, which is not a regulated depository and holds no regulatory capital against your loan. That is one real reason fund money is looser and more expensive at the same time. You are paying for the absence of a rule.
What a Miami construction loan actually looks like
Once the equity question is settled, the loan itself has a shape that is very different from a mortgage on a standing building. Four features surprise first-time ground-up borrowers.
The loan funds in draws. You do not receive the money at closing. You receive it in monthly increments against work already completed and inspected.
Part of your loan pays your own interest. A construction loan carries an interest reserve, funded out of the loan proceeds, that covers debt service during the build when the building earns nothing. On an $18,000,000 loan over a 24-month build, with an average outstanding balance near 55 percent of the commitment and an example rate of 9.00 percent, that reserve runs to roughly $1,800,000.
It is recourse, at least at first. Expect a completion guaranty and a carry guaranty from the sponsor personally or from a creditworthy entity. Many loans include a burn-off, where recourse steps down at certificate of occupancy and again at a stabilized debt service coverage ratio.
The rate floats. Construction loans are typically priced over a floating index and convert or refinance at completion, which means your interest reserve assumption is itself a rate bet.
Put together, the practical effect is that the headline loan amount overstates the money available for bricks and labor. Net that reserve out before you decide the budget works, and run your own numbers in our free loan calculator.
How the money reaches you: the draw schedule
The draw process is where construction loans are won or lost operationally. Every month you assemble a package, the lender's inspector verifies the work, title is updated, and only then does money move. Miss a document and the draw slips, which means your contractor waits, which is how schedules unravel.
| Item | Who produces it | What goes wrong |
|---|---|---|
| Application for payment with schedule of values | General contractor | Percentages claimed ahead of work actually in place. The inspector catches it and the whole draw is held. |
| Lien waivers from the contractor and subcontractors | GC and subs | One missing sub waiver. Common, and it stops the draw on its own. |
| Inspector's progress report | Lender's third-party inspector | Scheduling. Book the inspection before you submit, not after. |
| Title date-down endorsement | Title company | A newly recorded lien or claim appears between draws. |
| Updated budget with remaining cost to complete | Sponsor | The project goes out of balance, and the lender requires a cash deposit before funding continues. |
Two terms from that table deserve attention. Retainage is the portion of each payment, commonly 5 to 10 percent, that is held back until the work is complete and accepted. Budget for it, because it is your cash sitting in someone else's account for the length of the job.
In balance is the covenant that the undrawn loan plus your remaining equity must always be enough to finish the building. The moment a change order or a price increase breaks that test, the lender can stop funding until you deposit the difference. That single clause causes more distress on construction loans than interest rates do.
What Miami adds that other markets do not
Everything above is national. Four Miami-Dade items change the budget and the schedule in ways that lenders underwrite explicitly.
The High Velocity Hurricane Zone. Miami-Dade and Broward counties are the only jurisdictions in Florida governed by the High Velocity Hurricane Zone provisions of the Florida Building Code. Windows, doors, roofing assemblies and cladding require approved product testing, and the compliant products cost more and have longer lead times than standard specifications. A budget built from a national cost guide will understate the envelope.
Flood elevation. Much of the county sits in a FEMA special flood hazard area, and local rules commonly require finished floors above the base flood elevation. That drives podium design, fill, and sometimes an entire structured parking level, which changes both cost and unit count.
Insurance. Builder's risk with windstorm coverage in South Florida is a material line item, not a rounding error, and lenders verify the binder and the named insured before closing. Get a real quote early rather than a placeholder.
Entitlements and impact fees. Zoning approval, concurrency and impact fees are paid before vertical work begins and are usually funded from equity, not from the loan. Most construction lenders will not issue a commitment until the project is entitled and the permit path is clear.
The honest summary is that Miami is a more expensive place to build than the national averages suggest, and the gap is concentrated in the building envelope, the site work and the insurance. Lenders know this. A budget that does not reflect it reads as inexperience.
The Florida recording trap that kills closings
This is the item that catches out-of-state sponsors most often, and it is specific to Florida.
Under Florida's construction lien law, a Notice of Commencement is recorded before work begins, and construction liens generally relate back to that recording. If a Notice of Commencement is recorded, or visible work begins on the site, before your lender's mortgage is recorded, contractors can end up with lien priority ahead of the lender.
No construction lender will accept that. The practical consequences are simple and expensive: the title company will not insure the lender's first position, the closing stops, and the fix involves terminating the notice, obtaining lien waivers from everyone who touched the site, and starting over.
The rule to follow is short. Do not let anyone begin work, deliver materials or record anything until your lender's mortgage has been recorded and your title company confirms it. That includes site clearing and survey stakes. It is a one-line instruction to your contractor that saves a month.
What a construction lender will ask you for
A construction loan file is larger than an acquisition file, because the lender is underwriting four things at once: you, the contractor, the budget and the market. Have these ready before you approach anyone.
On the project: the full plan set, a detailed budget with a schedule of values, the construction schedule, the executed or draft construction contract, the entitlement and permit status, and a current survey and environmental report.
On the contractor: the license, financial statements, a schedule of completed and in-progress jobs, and bonding capacity. A lender may require a payment and performance bond or a subcontractor default insurance program.
On you: personal financial statement, schedule of real estate owned, liquidity verification, and a track record of projects of comparable size. First-time developers are not disqualified, but they usually need a partner with a record or accept lower leverage.
On the exit: a rent comparables study, an absorption assumption, and a credible take-out. The lender is asking a fair question. Who repays this loan, and at what value?
The general document flow is covered in our guide to the commercial real estate financing process, and if a bank has already declined the project, the routes still open are mapped in our guide on getting a commercial mortgage after a bank denial.
When ground-up does not pencil
Three situations come up often enough to name, and in each one the right answer is not a different lender.
The project is not entitled. If zoning approval is still pending, you are looking for land or predevelopment money, not a construction loan. That is a much smaller market at a much higher cost, and many sponsors are better off carrying the land while the approvals run.
The cash is not there. If you cannot meet the contributed-capital test and cannot raise the gap from a partner, a debt fund will lend at higher leverage and a higher rate. Run that math honestly against the project's margin before you sign, because the extra cost comes straight out of your profit.
Buying finished beats building. When construction costs are high relative to the price of standing assets, an existing building can be the better deal. That is a real outcome, and the comparison is worth running before you commit. Our guide to portfolio lending covers the options on standing property, and if you are financing an acquisition in Miami as a non-US buyer, start with our guide to the foreign national commercial real estate loan in Miami.
A plain disclosure belongs here. Commercial Mortgage Connection is a brokerage that is paid when loans close, which is exactly why this section tells you when not to borrow.
How CMC places a construction loan
Commercial Mortgage Connection is a commercial mortgage brokerage headquartered in Yonkers, NY, working a network of 750+ lenders carrying 500K+ loan programs across all 50 states, with more than $1,000,000,000 originated. Every engagement is led personally by founder Michael McGovern, and a submitted file receives a loan review response within 4 hours.
To be clear about what that means on a Miami project: CMC is a nationwide brokerage, not a Florida bank, and it has no Miami office. What a broker adds on ground-up is triage. The file goes only to lenders currently funding this asset type, at this leverage, in this market, which avoids the pattern that costs sponsors months, a bank that was never going to approve the deal.
The first conversation covers the three things that decide the outcome: your available cash measured against as-completed value, your entitlement and permit status, and your contractor. Everything else follows from those. How a strong file is assembled is covered in our guide on strengthening a commercial mortgage application, and harder scenarios are covered in how to secure financing for difficult commercial projects.
Commercial lending is regulated federally and at the state level. Lien law, permitting, insurance requirements and foreclosure rules vary by state, and Florida differs from the Northeast on several of them. Confirm the specifics with Florida counsel before you sign a term sheet. Call 888-656-9812 to talk through a project.
Miami construction loan FAQ
Who finances ground-up construction for a multifamily or mixed-use project in Miami?
Five sources do most of it: regional and community banks, private debt funds, the FHA insured HUD 221(d)(4) program, a bank senior loan combined with C-PACE and mezzanine financing, and single balance sheets such as family offices. Banks are the cheapest and slowest, debt funds the fastest and most expensive, and HUD the most patient capital with the longest timeline. Fannie Mae and Freddie Mac do not lend on construction; they finance the stabilized building afterward, which is your take-out rather than your build.
How much cash do I need for a Miami construction loan?
For a bank loan, plan on contributed capital of at least 15 percent of the project's as-completed value, contributed before the first advance and required to remain in the deal until the loan converts or is repaid. That threshold comes from the federal HVCRE capital rules, not from lender preference. Because it is measured against as-completed value rather than cost, a project with a strong projected valuation can require more cash, not less. Private debt funds are not bound by the rule and will lend at higher leverage for a higher rate.
How does a construction loan actually pay out?
In monthly draws against completed work, never as a lump sum at closing. Each draw requires an application for payment with a schedule of values, lien waivers from the contractor and subcontractors, a third-party inspector's progress report, a title date-down endorsement, and an updated cost to complete. Part of the loan is set aside as an interest reserve to cover debt service during construction, so the money available for hard costs is meaningfully less than the headline loan amount.
What makes building in Miami-Dade more expensive than the national average?
Four things. Miami-Dade and Broward are the only Florida counties governed by the High Velocity Hurricane Zone provisions of the Florida Building Code, so windows, doors, roofing and cladding require approved products that cost more and take longer to source. Much of the county sits in a FEMA special flood hazard area, which drives elevation and podium design. Builder's risk insurance with windstorm coverage is a material line item. Entitlements and impact fees are paid up front from equity rather than from the loan.
What is the Notice of Commencement problem in Florida?
Under Florida's construction lien law, construction liens generally relate back to the recording of the Notice of Commencement. If that notice is recorded, or visible work begins on the site, before the lender's mortgage is recorded, contractors can take lien priority ahead of the lender. No construction lender accepts that, the title company will not insure first position, and the closing stops. Instruct everyone on the project that no work, no deliveries and no recordings happen until the mortgage is recorded and the title company confirms it.
Sources
- Electronic Code of Federal Regulations, 12 CFR 3.2. Definition of a high volatility commercial real estate exposure, the acquisition, development and construction scope, and the contributed-capital and as-completed value conditions for exclusion. Checked 29 September 2026.
- Electronic Code of Federal Regulations, 12 CFR Part 34, Appendix A to Subpart D. Supervisory loan-to-value limits by loan category, including construction. Checked 29 September 2026.
- Federal Reserve Board, SR 10-16, Interagency Appraisal and Evaluation Guidelines. Appraisal independence and review standards that apply to regulated depository institutions. Checked 29 September 2026.
- Florida Statutes, Chapter 713, Liens, Generally. Construction lien framework, lien waivers and priority. Checked 29 September 2026.
- Florida Statutes, section 713.13, Notice of Commencement. Recording requirements and timing before commencement of work. Checked 29 September 2026.
- Florida Building Commission, Florida Building Code. Code editions and the High Velocity Hurricane Zone provisions applying to Miami-Dade and Broward counties. Checked 29 September 2026.
- Miami-Dade County, Department of Regulatory and Economic Resources, Building. Permitting and product approval for construction in Miami-Dade County. Checked 29 September 2026.
- US Department of Housing and Urban Development, Section 221(d)(4) Program Description. FHA mortgage insurance for new construction and substantial rehabilitation of multifamily rental housing. Checked 29 September 2026.
- US Department of Housing and Urban Development, Descriptions of Multifamily Programs. Program list, insured loan terms and eligibility. Checked 29 September 2026.
- Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices, July 2026. Reported bank standards and demand for construction and land development loans. Checked 29 September 2026.
- US Census Bureau, Construction Spending. Monthly value of construction put in place, including multifamily residential. Checked 29 September 2026.
Michael McGovernFounder, Commercial Mortgage Connection. Michael wrote and reviewed this guide drawing on a career that began at Bear Stearns & Co. in 1997, ran through structuring billions of dollars in CMBS and MBS in the F.A.S.T. group at Bear, and selling mortgage product at Lehman Brothers, and now spans more than $1 billion in originated mortgages.
Building ground-up in Miami? Send the budget, the plans and the permit status.
Senior-led review of your budget, your contributed capital measured against as-completed value, your contractor and your exit, with the lender list narrowed to those actually funding ground-up at your leverage today, and a loan review response within 4 hours. Call 888-656-9812, live operator 24/7.
Facts on this page were verified against the cited eCFR, Federal Reserve, Florida Statutes, Florida Building Commission, Miami-Dade County, HUD and US Census Bureau sources on 29 September 2026. Every rate, fee, percentage and dollar figure above is an illustrative example or a typical market range, not an offer, a quote, or a commitment to lend. Capital rules, building code requirements, lien law, insurance pricing and lender appetite change.
Nothing on this page is a loan offer, a rate quote, legal, tax or insurance advice, or personalized financial advice. Construction contracts, lien documents and loan documents require review by qualified Florida counsel, and all financing is subject to lender approval, credit review and project underwriting, with no approval guaranteed. Broker licensing, lien law and closing rules vary by state. Commercial Mortgage Connection is a commercial mortgage brokerage headquartered in Yonkers, NY, is not a Florida bank, has no Miami office, is paid when loans close, and sells the service described on this page. Equal Housing Opportunity.
