Commercial construction loan rates
Quick answer
Commercial construction loans are usually priced as a benchmark rate plus a spread, so they float during construction. Rates run higher than permanent mortgages because building carries more risk, and the best pricing goes to experienced sponsors with strong equity.
You typically lock a fixed rate when you refinance into permanent financing at completion.
There's no sticker price for a commercial construction loan. The rate is built from your deal.
Unlike a consumer mortgage with advertised rates, commercial construction pricing reflects the project's risk and your strength as a sponsor. Two builders can get very different numbers on similar projects.
Key takeaways
- → Rates are usually variable — a benchmark plus a spread — during the build.
- → They run higher than permanent mortgages because of construction risk.
- → Your equity, experience, project type, and exit drive the spread.
- → You typically lock a fixed rate at the permanent-financing refinance.
How commercial construction rates are priced
Most lenders quote a margin over a benchmark rate, so your rate moves with the benchmark during construction. The spread is where your deal's risk shows up.
Because the loan is short-term and draw-based, the focus is on the construction period; the long-term rate comes later with your permanent financing — see the commercial overview for how the exit works.
What drives your rate
Experience first. A proven sponsor with completed projects gets a tighter spread than a first-timer.
Then equity, project type, and location. More skin in the game and a fundable project type like multifamily earn better pricing than thin equity on a speculative build.
How to get a better rate
Bring more equity, pair with a strong general contractor, and present a detailed budget with a credible pro forma. A clear, reliable exit lowers the lender's risk and your spread.
Then compare. Spreads vary between lenders, and on a multi-million-dollar project a small difference is real money. See rates across all products for context.
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To compare project and business financing options together, eBoost Partners offers construction business financing.
Related guides
Commercial construction overview
How commercial build loans work.
Ground-up construction loans
Build from raw land.
Multifamily construction loans
Apartment financing.
Land development loans
Earlier-stage land financing.
All construction loan rates
Rates across every product.
SBA construction loans
A low-rate permanent exit.