An increase in labor and material costs, as well as rising interest rates, have added significant stress in the production of affordable housing nationwide. As the margin for Low Income Housing Tax Credit (LIHTC) deals becomes increasingly tight, a creative approach to financing such transactions is essential. One effective solution is a tax credit equity bridge loan. This loan can be used to bridge the timing difference between the tax credit investor equity installments and the required HUD equity pay in schedule or construction progress payments.

In partnership with our parent company, Midland States Bank, Love Funding has been active in providing such creative financing solutions by bundling our loans together to bridge the tax credit equity. Combining a tax credit equity bridge with traditional FHA financing delays 80% of the LIHTC delivery into the financing, thus increasing the value of the tax credits.

The value of the tax credit is further increased through the competitive terms of construction and permanent FHA insured loans. The FHA financing maximizes debt at the lowest rates available among all alternative debt sources, minimizing the impact of the current interest rate environment. In addition, Love Funding also has experience working with borrowers to further mitigate labor and construction costs through innovative housing trends such as modular construction.

“Our tax credit equity bridge loans, in conjunction with an FHA insured loan, raises the value of the LIHTCs. This creates significant cost savings on fees, thereby making the project more affordable. Working with our parent company, Midland States Bank, affords us a variety of bridge loan options. Together we find the right financing solutions tailored to the specific financing needs of each of our borrowers.”
– Jonathan Camps, Love Funding President

One recent example is the financing of Cranbrook Senior Tower. Using an FHA 223(f) acquisition loan in conjunction with 4% LIHTCs and a tax credit equity bridge loan, our borrowers were able to acquire and renovate the property in Ann Arbor, Michigan.

“It is truly a great feeling to have Love Funding be a part of our development team knowing that the needs of seniors will be met with an exceptional funding process.”


At Love Funding we take our role as your financing partner seriously. We work closely with each of our borrowers to ensure that they have the right financing package to meet the specific needs of the project, and provide support throughout the entire financing process and post closing. Contact one of our originators to learn more about Love Funding and our bridge options.