hud fha-223-F multifamily guidelines

hud fha 221(d)(4)

multifamily loan program guidelines

eligible properties

  • 5+ residential unit properties, including, detached, semidetached, row, walkup, or elevator-type rental or cooperative housing.

  • Properties must have complete kitchens and baths and have been completed or substantially rehabilitated for at least 3 years prior to the date of the application for mortgage insurance.

  • The program is available for market rate rental housing or for properties accepting rental assistance, either tenant based or project based.

  • Commercial area is permissible, but cannot exceed 20% of the net rental area, or 25% of the gross revenues.

  • Student housing properties that offer rents per room, not per unit, are ineligible.

  • 30 day minimum lease term required.

  • The property must meet a minimum three-year stabilization requirement (property must have been built and stabilized for three or more years before receiving a HUD insured mortgage). Properties with a project based affordability component (HAP Contract or other regulatory agreement) may apply for a waiver.

  • The loan may include repair costs not to exceed 15% of its value after repairs or no more than $6,500 per unit (except in high cost areas) - whichever is greatest. Repairs may not include replacing more than one major building system such as plumbing or electric.

Loan Term

  • No increase in loan proceeds available; however, a minimum DSC of 1.11x is required  based on T-12 operating financials and the new interest rate

Eligible Locations

  • All 50 states, Puerto Rico, U.S. Virgin Islands, and Guam. No market - economic or population restrictions.

loan size

  • $5,000,000 with no maximum.

maximum ltv

  • 85% for market rate properties.

  • 90% for affordable properties.

minimum dscr

  • 1.17. 1.15 for affordable properties

minimum occupancy

  • Property must demonstrate a pattern of stable occupancy for 6-Months prior to application and maintained until closing.

interest only

  • N/A

prepayment penalty

  • Negotiable - typically a two-year lock out followed by a step down premium (e.g. 8,7,6,5,4,3,2,1).


  • Non-recourse subject to standard carve-outs.


  • Yes, subject to lender approval.

supplemental loan

  • Available 12 months from date of closing of first loan.

subordinate debt

  • Permitted up to 7.5% on an exception basis.

rate lock

  • At commitment.

cash out refinances

  • Cash out allowed when 80% of value exceeds existing debt plus transaction costs, but only 50% of the net cash will be released at closing. The other 50% will be escrowed until completion, inspection and approval of the non-critical (immediate) repairs.


  • Tax and Insurance Impounds: Required.

  • Replacement Reserves: Required - Monthly deposit required and amount depends on property condition.

  • Initial Deposit to Reserve Fund: Required - One time deposit may be required depending on property condition.

  • Critical and Non-Critical Repair Escrow: May be required for properties with life, safety, health or code related repair and/or maintenance concerns.


1. Replacement reserves required in accordance with HUD guidelines;

2. Taxes and Insurance escrowed monthly (post construction);

3. Working Capital Reserve equal to 4% of loan amount (post in cash or LOC);

4. Operating Deficit Reserve equal to 3% of loan amount, or greater as determined by HUD at commitment (post in cash or LOC).

fees and expenses

  • Third Party Reports: appraisal, engineering report, environmental analysis and flood certification.

  • FHA Inspection Fee: 1% of repair costs or $30 per unit if repairs are less than $3,000 unit.

  • FHA Exam Fee: $3 per $1,000 of the loan balance.

  • Financing Fee: 1%-3% depending on loan size and loan complexity.

  • Permanent Placement Fee: 1%-2%.

  • First Year Mortgage Insurance Premium: 1% of loan amount for market rate properties and .25%-.35% for affordable properties.

  • Monthly Mortgage Insurance Premium: .60% and .25%-.35% for affordable properties.

  • Borrower's Legal: Estimated at $10,000-$20,000.

  • Title & Recording Fees: TBD.

sponsor requirements

  • Experienced owner operators preferred.

  • Minimum credit and financial capacity requirements.

  • HUD experience preferred.





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