initial funding of a construction mortgage that a lender agrees to advance without regard for tenant leasing, or requiring the builder to substantially complete the project and have a certificate of occupancy. For example, the lender may fund 80% of the total cost of a project, with the remainder, called a holdback, held aside until the builder has leased the majority of units or has the building ready for occupancy. A floor to ceiling loan, in contrast, has two separate fundings: one at satisfactory completion of the project, and a second funding when the building is fully occupied or meets cash flow requirements set by the lender.
minimum that a lender is willing to advance.
the minimum that a lender is willing to advance.
Example: Abel, a lender, agrees to a $700,000 floor on a $1,000,000 permanent loan. When construction is complete, the borrower will receive a $700,000 floor loan; when the property is 80% occupied the full $1,000,000 will be loaned.
