Most residential-adjacent product sizes on cost during construction and stays cost-anchored after. BTR doesn’t, once stabilized, it drops the LTC test entirely and sizes purely against value and income: 75% LTV, 1.20x DSCR, 8.0% debt yield, whichever of those three is most restrictive on the file.
Construction runs 65 to 75% LTC on bank paper, with some banks as conservative as 50% and debt funds willing to go to 80% for the right sponsor and market. Once vertical is complete and lease-up begins, bridge financing at 65-75% of stabilized value, SOFR + 350-550 with 1 to 2 points, carries the asset through stabilization.
"The stabilized test is the whole reason BTR pencils differently than for-sale housing built on the same lots. It gets valued like an apartment, not like a subdivision."
Fannie Mae and Freddie Mac single-family rental programs are the practical takeout for a 5 to 7 year hold horizon, and they price close to conventional multi-family agency paper. Sponsors underwriting a longer hold should still model the stabilized test above; it’s what the agency takeout will apply regardless of how the construction and bridge stack was built.