hud fha-223-f multifamily guidelines

HUD FHA 223(f)

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).

Guarantee

Non-recourse subject to standard carve-outs.

Assumable

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.

Escrows

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.

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.

Hours

Monday9:00AM - 6:00PM
Tuesday9:00AM - 6:00PM
Wednesday9:00AM - 6:00PM
Thursday9:00AM - 6:00PM
Friday9:00AM - 6:00PM
Saturday12:00PM - 5:00PM
SundayCLOSED

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