HUD FHA 221(d)(4) Construction Loans are for substantial rehabilitation of Multifamily properties. The Interest-only term is equal to actual construction period plus 2 months for cost certification followed by 40 years fully amortizing. Financing is available up to 90% for subsidized projects and payment of prevailing wages is required, as determined by the Department of Labor, for all contractors and subcontractors. The loan is assumable, requires impounds for taxes, insurance, mortgage insurance, and replacement reserves. The construction loan rolls to permanent financing at the same rate. Great for reducing exposure to interest rate environment.

Lending CriteriaDescription
Purpose:
  • Purchase and Refinance
Markets:
  • Nationwide
Eligible Borrower:
  • Individual
  • Single Asset LLC’s
  • Special Purposes Entities
  • For Profit or Non-Profit
Property Type:
  • Apartment Buildings
  • Commercial – Carve Outs (25%)
Max Loan-to-Value:
  • Subsidized:  90%
  • Affordable:  87%
  • Market: 85%
Minimum Credit Score:
  • 650
Recourse:
  • No – Standard Carve Outs
Broker Fee:
  • 1 point
Terms:
  • 40-Years Fixed
Mortgage Insurance:
  • 0.65% – Annually thereafter
Loan Amounts:
  • $7,000,000+
Closing Timeframes:
  • 12 Months – Due Diligent to Closing
Amortization:
  • 40-Years
Collateral:
  • 1st Trust Deeds
Impounds:
  • Required for Tax & Insurance
HUD Application:
  • 0.30% of Estimated Loan Due with Application for Subsidized Properties
Other Costs:
  • All 3rd Party Fees