CDC/504 loan fees are typically 3% of the loan amount. These can sometimes be paid with the loan. You’ll also need to put at least 10% down on your purchase.
Interest rates for CDC/504 loan programs can get complicated. In short, the exact rate won’t be known until about 45 days after the loan is secured, but you can usually expect it to be between 5% and 6%.
This is because the CDC/504 loan isn’t just one loan – 50% comes from the bank and 40% comes from a Certified Development Corporation (a CDC). They other 10% is your down payment. They pool their projects and auction them to investors.The sale determines the interest rate, and the sale takes place about 45 days after you close the loan. Historically, it’s been around 4% to 5%, and after bank rate, the total interest usually comes to between 5% and 6%.
This complicated process, thankfully, is all handled automatically.