Market Rate Multifamily Housing
PDF Version Refinance or Acquisition
HUD Section 223(f)
Loan Program Highlights
Fixed Interest Rate
Fully Amortizing
Non-Recourse
Assumable Permanent Financing
Cash-Out Permitted
Eligible Properties
Any multifamily property that is at least 85% occupied and does not require substantial rehabilitation.
Maximum Term
35 years or 75% of the remaining economic useful life, fully amortizing.
Maximum Mortgage
Determined by the lesser of:
- DSCR of 1.15 on an underwritten vacancy of at least 7%, or
- 87% Loan to Market Value, or
- For Acquisition Transactions: 87% of Eligible Acquisition Cost
- For Refinance Transactions: The greater of 100% of Cost to Refinance or 80% of Market Value
Personal Liability
FHA loan is non-recourse with standard carve outs.
Assumable
Yes, subject to FHA approval.
Fees and Expenses
0.3% application fee due at application. Financing and permanent placement fees of up to 3.5% are based on final loan amount, due upon commitment and payable at closing. HUD inspection fees vary based on the total cost of critical and non-critical repairs.
Mortgage Insurance Premium
1.0% of loan amount for the first year and 0.60% of the outstanding principal balance calculated annually thereafter.
Other FHA Requirements
- The client must pay for all third party reports, which include a Phase I Environmental Site Assessment, Appraisal and a Capital Needs Assessment (CNA).
- Commercial space is limited 25% of total net rentable area and commercial income to 20% of effective gross income.
- HUD allows secondary financing on Section 223(f) loans up to total debt of 92.5% Loan-to-Value, repaid with surplus cash.
- All Critical Repairs must be completed prior to closing.
- Non- Critical Repairs may be completed within 12-months after endorsement with complete bids on work items greater than $25,000, and a financial escrow equal to 120% of the non-critical repair costs must be established at closing.
- An Initial Deposit and Annual Deposits must be made to the Reserve for Replacement Account in accordance with the PCNA and underwriting conclusions.
- Escrows for property taxes, insurance and MIP are required and held by the Lender.
- Borrowers and management agents must comply with HUD Fair Housing and Equal Opportunity requirements.
- A new CNA report is required every 10 years.
- An annual audit is required