HUD Affordable Housing Mortgage Programs
As defined by HUD, affordable housing is a project that meets either the minimum affordability requirement for Low Income Housing Tax Credits (LIHTC) or project-based Section 8 housing.
To qualify as affordable housing under the LIHTC affordability requirement, a governmental agency must impose, monitor, and enforce rent and income restrictions for at least 15 years after Final Endorsement. This occurs through a recorded Regulatory Agreement requiring the project to meet either LIHTC restrictions, including income averaging where 20% of units rent at 50% of area median income (AMI) or 40% of units rent at 60% of AMI.
Projects need not use LIHTCs to qualify for affordable underwriting so long as they meet the requirements for LIHTC affordability. To qualify as affordable based on project-based Section 8 housing, the project must have a Housing Assistance Payment contract covering 90% of the units with a minimum remaining term of 15 years.
The Benefits of FHA-Insured HUD Affordable Housing Mortgage Programs
To offset the costs of new construction, substantial rehabilitation, and ongoing maintenance of affordable housing, HUD insures mortgages offered by its HUD-approved lenders, providing several benefits to multifamily developers and operators, which may include:
- Non-recourse loans to fund a wide range of properties.
- Lower fixed interest rates, and longer, fully amortized terms translate to lower payments and greater cashflow.
- Lower debt service coverage underwriting requirements.
- Loans are fully or partially assumable, which can be attractive for sale opportunities or estate planning purposes.
- Up to 35 years of fixed rate and fully amortizing for existing projects.
- Up to 40 years of fixed-rate financing, plus construction time, for new construction or substantial rehabilitation.
- Cash-out refinancing opportunities for owners to repurpose equity.
- Finance value-add and other capital expenditures.
- A Low-Income Housing Tax Credit (LIHTC) program to encourage investment in affordable properties.
FHA-Insured Mortgage Programs for HUD Affordable Housing Projects
As an approved Multifamily Accelerated Processing (MAP) lender, Century Health & Housing Capital offers several FHA-insured mortgage programs under the HUD affordable housing program, including: