The quick read: Multifamily construction in Salt Lake City is financed with a construction loan sized on total project cost, funded in draws as work is completed, and repaid by a permanent take-out sized on the finished building's income. The local fact that shapes the capital stack is scale. The Census Bureau counted 4,471 units in 89 buildings of five or more units permitted across the Salt Lake City-Murray metro in 2025, about 50.2 units per building (our arithmetic), close to three times the Ogden and Tulsa averages. Projects in the Granary District and Ballpark are sized as large single-phase deliveries, and the city's utilities department proposed in July 2026 to raise its sewer, water and stormwater impact fees, so the budget line most borrowers inherit from an old pro forma may already be stale.
How do you finance multifamily construction in Salt Lake City?
You finance multifamily construction in Salt Lake City with a construction loan that covers part of the total project cost, hard equity that covers the rest, staged draws as work is completed, and a permanent take-out loan sized on the stabilized building's income, which in practice caps how large the construction loan can be.
NerdWallet's commercial construction loan guide (updated March 6, 2026) describes the mechanics. Borrowers usually get 70% to 90% of the total project cost, and lenders use loan-to-cost or loan-to-value ratios to decide how much to offer. A loan-to-cost ratio is the share of total project cost a lender will fund.
Typical funding (NerdWallet, updated Mar 6, 2026): 70% to 90% of total project cost
Draws (NerdWallet, updated Mar 6, 2026): funds released in stages, each tied to a project milestone
Payments during construction (NerdWallet, updated Mar 6, 2026): often interest-only, and only on the amount drawn
Repayment (NerdWallet, updated Mar 6, 2026): short terms, with the balance due at completion unless refinanced or converted
Federal bank guidelines set the outer limits. The interagency real estate lending guidelines (12 CFR Part 34, Subpart D, Appendix A, 2025 edition) put the supervisory loan-to-value limit for commercial and multifamily construction at 80%, raw land at 65% and land development at 75%, and say loan disbursements should not exceed actual development or construction outlays. The same guidelines ask lenders to set standards for hard equity, interest reserves, pre-leasing and takeout commitments, so expect each of those to show up in a term sheet.
Why are Salt Lake City apartment projects so large?
Salt Lake City apartment projects are large because the metro's permitted 5+ unit format averages about 50.2 units per building, against about 18.4 in Ogden and 15.6 in Tulsa, based on the Census Bureau's 2025 permit counts (our arithmetic), so new supply arrives as big single-phase buildings rather than staged small walk-ups.
The 2025 Census Building Permits Survey file shows the contrast directly:
| 2025 permits, 5+ unit buildings (Census Bureau) | Salt Lake City-Murray | Ogden | Provo-Orem-Lehi | Tulsa |
|---|---|---|---|---|
| 2025 permits, 5+ unit buildings (Census Bureau) Buildings | Salt Lake City-Murray 89 | Ogden 90 | Provo-Orem-Lehi 146 | Tulsa 83 |
| 2025 permits, 5+ unit buildings (Census Bureau) Units | Salt Lake City-Murray 4,471 | Ogden 1,656 | Provo-Orem-Lehi 1,695 | Tulsa 1,292 |
| 2025 permits, 5+ unit buildings (Census Bureau) Units per building (our arithmetic) | Salt Lake City-Murray 50.2 | Ogden 18.4 | Provo-Orem-Lehi 11.6 | Tulsa 15.6 |
Ogden permitted one more 5+ building than Salt Lake City-Murray but about 37% as many units (our arithmetic on the Census Bureau counts). That scale changes the financing in three ways. The loan is bigger, so the lender's equity, guarantor and experience requirements rise with it. A single-phase building has to be finished before most units can lease, so the interest carry runs longer before income starts. And the take-out has to be large enough to repay the construction loan in one piece.
Central Ninth is the contrast inside the city: smaller infill sites where a developer may build in the range of a few dozen units. The financing mechanics are the same; the check size and the lease-up period are smaller.
How do Salt Lake City's proposed impact fees change the construction budget?
Salt Lake City's proposed impact fees change the construction budget because the city's utilities department proposed in July 2026 to raise sewer fees from $409 per apartment unit to $3,225 per dwelling unit under one option and to roughly triple water meter fees, and those charges are paid with permits, before any rent arrives.
The city's impact fee page lays out the current and proposed charges. It says that if the Council approves the proposal, the fees take effect 90 days from the approval date.
| Salt Lake City impact fee (slc.gov) | Current | Proposed |
|---|---|---|
| Salt Lake City impact fee (slc.gov) Sewer, townhouse or apartment unit | Current $409 per unit | Proposed $3,225 per dwelling unit (Option 2) |
| Salt Lake City impact fee (slc.gov) Water, 2-inch meter | Current $11,776 | Proposed $35,135 |
| Salt Lake City impact fee (slc.gov) Water, 4-inch meter | Current $27,359 | Proposed $81,423 |
| Salt Lake City impact fee (slc.gov) Water, 6-inch meter | Current $54,718 | Proposed $162,847 |
| Salt Lake City impact fee (slc.gov) Stormwater | Current $374 per quarter acre | Proposed $1,963 per quarter acre |
The page also lists an Option 1 for sewer that charges by water meter size instead of by dwelling unit. Until the Council acts, budget both the current and the proposed schedule, check the city's consolidated fee schedule at the date your permits will be pulled, and ask your lender whether a fee increase after closing comes out of contingency or out of new equity.
What does the budget math look like on an illustrative 50-unit Salt Lake City project?
On an illustrative 50-unit Salt Lake City project costing $15,000,000, the proposed impact fees would add about $198,000 to the budget, and a take-out sized on stabilized income at 1.25x, Freddie Mac's small balance minimum, supports about $8.36 million, roughly 56% of cost, well below the 70% to 90% headline range.
Every input below is an illustrative assumption, not a quote, a market rent, an appraisal or a lender term. The fee lines use the city's published schedule with an assumed single 4-inch water meter and a half-acre site.
| Illustrative line (our arithmetic) | Current fees | Proposed fees |
|---|---|---|
| Illustrative line (our arithmetic) Sewer, 50 units | Current fees $20,450 | Proposed fees $161,250 |
| Illustrative line (our arithmetic) Water, one 4-inch meter (assumption) | Current fees $27,359 | Proposed fees $81,423 |
| Illustrative line (our arithmetic) Stormwater, half acre (assumption) | Current fees $748 | Proposed fees $3,926 |
| Illustrative line (our arithmetic) Total utility impact fees | Current fees $48,557 | Proposed fees $246,599 |
| Illustrative line (our arithmetic) Increase | Current fees n/a | Proposed fees $198,042, about $3,961 per unit |
Now size the take-out. Assume rent of $2,100 per unit per month, 7% vacancy and credit loss, and $400,000 of annual operating expenses including taxes. That gives stabilized net operating income of $771,800. At a 1.25x coverage test and a 6.25%, 30-year loan constant of about 0.0739, the take-out supports about $8,356,600, or about 56% of the $15,000,000 cost (all our arithmetic).
Two conclusions follow. First, the take-out, not the construction lender's headline leverage, sizes the loan; a construction loan larger than the take-out leaves a gap the sponsor must fund at completion. Second, a fee increase that lands after the loan is sized comes out of equity or contingency, because the take-out does not grow with the budget. Hold rents flat in the model; do not count on rent growth to close either gap.
What take-out loans fit a Salt Lake City apartment building?
The take-out for a Salt Lake City apartment building depends on its size, and the metro's 50-unit average sits right at the ceiling of Freddie Mac's small balance program, which covers properties of 5 to 50 units with loans generally from $2 million to $10 million, so many projects here need a larger agency, bank or life company loan.
Freddie Mac's Conventional Small Balance Loan term sheet (dated 4/26) sets the outline:
Eligible properties (Freddie Mac, 4/26): predominantly market-rate properties of 5 to 50 units
Loan amount (Freddie Mac, 4/26): generally $2 million to $10 million
Loan purpose (Freddie Mac, 4/26): acquisition or refinance
Minimum DSCR (Freddie Mac, 4/26): 1.25x
Maximum LTV (Freddie Mac, 4/26): 75% for 5- to under-7-year terms, 80% for 7-year and longer amortizing terms
Tax and insurance escrow (Freddie Mac, 4/26): generally required
A 55-unit building falls outside that box; a 40-unit Central Ninth building may fit inside it. Decide which take-out you are targeting before you sign the construction loan, because the take-out's coverage test and leverage limit set the most the construction loan can safely be.
How do you get a Salt Lake City construction loan placed with the right lender?
You get a Salt Lake City construction loan placed by sending each lender the same complete package, with the budget at current and proposed impact fees, the draw schedule, the equity source and the target take-out, so quotes compare line by line. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors.
YieldStack's software matches the project against a catalog of 20,000+ loan programs, a count of programs rather than of lenders. Human brokers then structure the capital stack, negotiate for the borrower on leverage, interest reserve and draw terms, and carry the deal toward closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
What to send:
- Site address, zoning, entitlement status and the permit timeline
- Full budget: land, hard costs, soft costs, contingency, interest reserve and utility impact fees at current and proposed rates
- General contractor, contract type and the draw schedule
- Sponsor equity amount and source, plus the guarantor's financial statement
- Unit mix, rent assumptions held flat, operating expense budget and the lease-up schedule
- The take-out you are targeting and its coverage and leverage limits
The Salt Lake City market hub collects our Salt Lake City material and the Utah market hub covers the rest of the state; neither is a promise of any particular lender or term. When the package is ready, send the project for review. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
The bottom line
Salt Lake City builds apartments big: about 50.2 units per permitted 5+ building in 2025, close to three times Ogden and Tulsa. Size the construction loan from the take-out backward, carry the city's July 2026 impact fee proposal in the budget until the Council acts, and hold rents flat, because a single-phase delivery leaves no room to fix a short take-out later.