FHA Mortgage Insurance
Apartments
New Construction/Substantial Rehab
Section 220, 221(d)(4), and 221(d)(3)
Financing for the new construction or substantial rehabilitation
of Apartment and seniors (no services) properties.
Features
Two-step processing under HUD’s
Multifamily Accelerated Processing (MAP).
Insured mortgages may be used to finance BOTH
the construction and permanent loan of the properties.
Limited commercial space and income may be
included in the loan.
No occupancy threshold required to close permanent
loan.
May also serve as credit enhancement
for tax-exempt bond deals
Structure
Loan
Amount
a. 221(d)(4)
or 220: lesser of: (i) amount supported by 1.11 debt service
coverage; (ii) 90% of costs; or (iii) statutory unit limitations
b. 221(d)(3): lesser of: (i) 1.05 debt service coverage;
(ii) 100% of costs for nonprofit borrowers; or (iii) statutory
unit limitations
Loan
Terms
40 years,
plus the construction period which is interest only.
Amortization
fully
amortizing, 40 years for most properties.
Recourse
norecourse
Rates
- Ginnie Mae MBS and whole
loan rates priced daily
- rate may be locked for both the construction and permanent
loan anytime after borrower’s acceptance of HUD’s
firm commitment
- interest rate buy-downs available
Optional Features
Assumability
fully
assumable with HUD’s and lender’s consent
Prepayment
any prepayment lock
out or penalty periods negotiable with investor
Requirements
Initial deposit to the replacement reserve can be included
in the mortgage; monthly deposits required.
Single-asset borrower entity.
Comply with prevailing wage requirements under the Davis-Bacon
Act.
