Developers looking to secure an affordable deal have have plenty of financing options on the menu, and they’re just as hungry as they were last year.

Michael Gigliotti, a director of debt placement for commercial real estate capital intermediary HFF, says there are options for a developer to tap into for specific deals. But Gigliotti, who works in New York for the Pittsburgh-based company, says each lender is keeping the lessons learned on the table and proceeding with caution.

Still, lenders Gigliotti has worked with recently have indicated they would like to put out as much, if not more money than they did last year, as the economy improves. “Lenders are just putting out more money because they have more money to put out,” he says.

While the Federal Housing Administration's (FHA's) construction-to-perm product, also known as the Sec. 221(d)(4) program, offers some great rates and terms, life insurance companies are increasingly playing in this space as well. The 221(d)(4) program offers leverage of up to 83.33 percent on a fixed-rate, fully assumable loan.

However, FHA has other constraints and concerns, especially in high-cost areas.

“In a location like New York City, it’s going to cost more to build and you won’t be able to get the number of dwelling units they want,” Gigliotti says. “Rarely, will you be able to get there.”

Richard Gerwitz, managing director at Citi Community Capital, says banks are highly competitive in high-yield markets, like New York City, where Community Reinvestment Act requirements drive the construction activity. However, he feels the availability of financing for new affordable construction may be trending down as construction becomes more costly.

In some of the largest markets, there are many institutional investors fighting for very little product because of the limited amount of tax credits issued in each area, he says.

“It drives pricing for construction down and starts driving tax credits up,” he says. “Those are the markets where you have the most significant rent differentials. Those are the places we feel most comfortable in terms of lending.”

However, affordable developers may have a tough time finding the right budget for a smaller market deal where affordable rents are closer to the market-rate product and institutional pricing is softer.

And while banks are focusing on working with developers they know, they’re also open to building new relationships when it comes to building affordable units.

“There are situations where there’s a real need for that particular project in this community and it’s important, even though we haven’t worked with that developer, we will go out of our way to do those projects that have a level of affordability for those [renters] in need,” he says.