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Frequently Asked Questions

What is the maximum Loan to Value (LTV) ratio EDC will loan?
The maximum Loan-to-Value (LTV) that EDC will loan is 73% LTV and it is based on the after-improved value (ARV) of the property. For example, if a property will be worth $150,000 after it has been repaired, the maximum loan EDC will provide is $109,500. This amount includes the purchase price, construction amount, closing costs, points, and the interest reserve for the term of the loan. If the cost exceeds the 73% LTV that EDC loans, the investor can fund the difference between the 73% and the amount needed in the form of a down payment at closing. For loan amounts above $375,000, the maximum loan to value is 68%LTV.

How do I calculate my maximum purchase price under the EDC loan program?
EDC will loan a max LTV of 73% which includes purchase costs, construction costs, closing costs, insurance, a six month interest reserve, and loan origination fees. In order for you to obtain 100% financing with no down payment, you can use this formula to calculate your maximum purchase offer. If your project costs exceed the formula below, a down payment will be necessary at closing for the overage.

After Repair Value x 64% - Construction Budget - Closing Costs = Maximum Purchase Price with no down payment necessary

Example: 150,000 ARV x 64% = $96,000
$96,000 - $15,000 Construction Costs = $81,000
$81,000 - $2,300 Closing Costs = $78,700 (Max Purchase Price with no down payment)

What is the duration of a loan from EDC?
EDC rehab loans are typically set up for a 6 month loan term. The term of new construction or commercial development loans terms will be negotiated on a case by case basis.

What types of properties will EDC fund?
EDC will fund any residential project that doesn’t exceed four units. Therefore, single families, townhouses, condos, duplexes, and 4-plexes are all eligible for funding. EDC will also entertain new construction and development loans on a deal by deal basis.

How and when are the construction funds released?
Construction funds are released on a weekly draw basis. The investor submits a draw request through our website by 5PM each Tuesday and the properties are then inspected by an EDC territory director to approve the draw requests. Upon a positive inspection, a deposit is made directly into your checking account every Friday. Therefore, there is no delay in receiving construction funds from EDC. Please note that if any permits are required on your property, EDC will require copies of final inspection certificates to be faxed to our office prior to receiving a final construction draw for that certain construction category.

What credit score must I have to receive a loan from EDC?
In order to qualify for our program, the borrower must have a minimum middle credit score of 680 and be able to qualify for a conventional refinance mortgage to pay off their EDC loan. Experience in real estate and/or construction is an added benefit but not required. EDC inquires on your credit prior to each loan closing and we request that you provide us with a copy of your middle credit score at the pre-approval stage so that your credit score does not have to be pulled twice. You may obtain a free copy of your credit report online.

How long does it take for a borrower to be pre-approved and what is the typical time frame for closing a loan with EDC?
EDC can pre-approve a borrower immediately upon receipt of the borrower's credit report (middle score) pullled within the last 3 months. Once a loan application has been submitted to EDC, your loan should close in approximately 10-20 days if all requested documents have been provided promptly by the borrower.

What is the advantage of using the funding that EDC provides?
EDC finances 100% of the purchase, construction, and closing costs and we close loans very quickly (typically within 7-10 days from the date of application). Our loans require no monthly payments for the loan duration and we never charge pre-payment penalties. Some lenders will charge application fees, inspection fees, wiring fees, etc. At EDC, we only charge you points and interest on the loan - No Junk Fees! In addition, EDC allows borrowers to do mulitple projects at a time once a client has purchased one property and completed it successfully with EDC.

In what geographic areas will EDC provide funding? EDC loans are available in:

Virginia (Hampton Roads & Tidewater Area, Richmond, Petersburg, Hopewell, etc.)
Maryland (Prince Georges, Montgomery, Howard, Anne Arundel, Baltimore, Baltimore City, Frederick, Carroll, Hartford, Calvert, Charles)
Washington D.C.
North Carolina (Greater Charlotte, Asheville, Raleigh, Cary, Durham, Fayetteville, Greensboro, Wilmington, Fayetteville, Nags Head, and Elizabeth City)
South Carolina (Greenville, Spartanburg, Columbia, Rock Hill, Florence)
Pennsylvania (Greater Philadelphia Area and the Greater Pittsburgh Area)
Missouri (Kansas City and Saint Louis)
Kansas (Kansas City)
Florida (Jacksonville, Tampa Bay, Tallahassee)
Texas (Dallas, Fort Worth, San Antonio, Austin)

What attorney/settlement office does EDC use to originate its loans?
Properties that are located in Hampton Roads must all close at the office of M. Richard Epps, PC when the property is being acquired. When reselling or refinancing, the investor may close at any title company or attorney’s office. However, closing your property at M. Richard Epps, PC on both the purchase and sale will make the closing process much easier for you.

Properties that are located outside of Hampton Roads (Virginia) may close at the settlement office of the borrowers choice or at an EDC approved settlement office.

Who can I use for builders risk and general liability insurance coverage on EDC loans?
EDC uses a master insurance policy for all loans and an insurance certificate will be issued to the borrower at settlement. The insurance coverage is obtained by ordering insurance through the EDC website. The insurance company (Brown & Brown Flagship Insurance - Kate Sorge) can be reached at 757.628.3239

Will EDC loan on properties that are occupied at the time of closing?
Due to insurance restrictions and issues with construction work around tenants, EDC will not fund properties that are occupied at the time of purchase.

Does EDC provide yearly interest statements to clients for the interest carried on its loans?
No, EDC does not provide yearly interest statements to clients for interest carried on its loans. Since the interest expended on behalf of the client is added to the job costs of the property, it is part of the capitalized cost of the rehab property. Please click here to view the IRS' explanation of capitalized interest as part of total job cost.

What can I use the loan proceeds for?
EDC loans are for commercial purposes only and not for personal, family, or household purposes. Loan proceeds are for the purchase and rehabilitation of commercial investment properties intended to be resold for investment profit or rented to persons (other than family members) for investment return.