HUD 221(d)(4)
FHA/HUD Multifamily Loans - The Complete Guide
The Truth About FHA/HUD Multifamily Loans
As the founder of Apartment Loan Store, I have closed over seventy FHA/HUD Multifamily loans since 1999. I can tell you, they sure can be a hard sell. Why? Because there are just as many negatives about these loans as there are positives and I always insist on informing my clients the negatives in our first meeting. Several Weeks ago, Randy, a real estate developer who had just rented up a 147-unit apartment building he built in Dallas, emailed me a quote from his bank for a permanent loan and asked me to beat it.
HUD 221(d)(4) Loan Rates
HUD 221(d)(4) Loan Rates for the New Construction and Substantial Rehabilitation of Multifamily properties change daily as the 10-year treasury yield index changes. HUD adds a spread to this index based on perceived risk. If the treasury yield were to be 3.25% and the spread is 2.50 the all-in rate would be 5.75%. Interest rates are .35% lower for buildings certified green by Energystar or Leed. Rates cannot be locked until Loan Approval. Today’s rates below include the Mortgage Insurance Premium (MIP)
HUD 221(d)(4) Loan for Multifamily Construction
The HUD 221(d)(4) Loan is for new construction or substantial rehabilitation of multifamily properties of 5 units or more. Multiple residential buildings of 1 – 3-units on one or individual tax lots that are not allowed. However, multiple 4-unit buildings that are contiguous are acceptable. Mixed-use properties are accepted where the commercial space is no more than 25% of the rentable square footage or 20% of the gross rental income.
Advantages of a HUD Multifamily Loan
17 Advantages of a HUD Multifamily Loan:
| *Highest LTV at 80 – 90% | *1.176 DSCR Market Rents |
| *Cash Our for Any Reason | *1.15 DSCR Affordable Rents |
| *Unlimited Loan Size | *Same Rate Construction Roll over to Perm |
| *35 Year Fixed Rates | *No Global or Debt to Income Ratio |
| *40 Year Fixed Rate New Construction | *Assumable |
| *No Tax Returns Required |