MULTIFAMILY | FHA/HUD Section 223(f)
Acquisition and Refinancing of Multifamily Properties
Our HUD Section 223(f) program provides for permanent financing for the purchase or refinance of market rate multifamily properties, affordable or rental assisted properties.
Eligible Properties
Multifamily properties including market rates, affordable or rental assisted properties.
Term
Up to 35 years.
Interest Rate
Locked before closing and fixed for the duration of the term. (Subject to market conditions.)
Guarantees
Non-recourse for the duration of the term.
Prepayment
Customizable, typically a 10-year step down, based on market conditions and borrower preferences.
Assumable
Subject to FHA/HUD and lender approval.
Loan Parameters
Maximum loan amount will be the lessor of parameters below. Large loans (currently > $130MM) carry more conservative UW numbers.
| Market Rate | 87% | 87% | 1.15 |
| Eligible Affordable | 90% | 90% | 1.15 |
| Subsidized | 90% | 1.11 | 1.11 |
(*Max LTV for cash out refinance is 80%.)
HUD Fees and Expenses
- The annual Mortgage Insurance Premium (MIP) is 0.60% of the outstanding loan amount for market rate transactions. Reduced MIP rates as low as 0.25% for affordable projects or projects that qualify for Green/Energy Efficient Housing.
- FHA Application Fee of 0.30% of loan amount.
- FHA Inspection Fee is based on the level of repairs.
- Replacement Reserves determined by a 20-year capital needs analysis, minimum of $250 per unit per annum with initial deposit based upon CNA.
Commercial Space
Limited to 25% of net rentable space and 20% of gross income.
Third-Party Reports
Appraisal, Environmental, Property Capital Needs Assessment (PCNA) required.
Timing
Approximately 6-9 months for engagement, submission, FHA/HUD review, and closing.
Funding
Ginnie Mae guaranteed mortgage-backed securities.
Other Program Parameters
- Escrows for property taxes, insurance, MIP, and replacement reserves are required.
- Total repairs are limited to approximately $45,000 per unit with valuation and DSC assuming completion of those repairs. Lender holds 110%-120% escrow and repairs must be completed in 12 months.
- Age restricted properties may quality so long as head of household is 62 or older and occupancy is not restricted to any remaining occupants. Affordable properties may be eligible for 55+ restriction.