HUD 223(f)
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 223(f) Loan Rates
By Terry Painter/Mortgage Banker, Author of The Encyclopedia of Commercial Real Estate Advice – Wiley Publishers, Member of the By Terry Painter/Mortgage Forbes Business Council
HUD 232/223(f) Loan
The HUD 232/223(f) loan is for the acquisition or refinance of Senior Independent Living, Intermediate Care, Assisted Living and Licensed Nursing Home facilities. All properties are required to have 20 or more residents who require skilled nursing care and are in continual need of nurses, certified nurse assistants, and other care providers. All properties must be licensed by the state or other governing agencies. Eligible borrowers can include for profit investors or nonprofit corporations or associations.
HUD 223(f) Loan for Purchase and Refinance
The HUD 223(f) loan is used for the acquisition, refinance, or minor rehabilitation of multifamily properties of 5 units or more. Multiple single-family homes, duplexes or triplexes are not acceptable. Multiple 4-unit buildings that are contiguous on one or individual tax lots are allowed. Mixed-Use properties can be financed if the commercial space does not occupy more than 25% of the rentable square footage or account for more than 20% of the gross rents.
Minimum Loan Amount for HUD 223(f)
The Minimum Loan Amount for the HUD 223(f)
The minimum loan amount for HUD 223(f) averages around $3,000,000 – although HUD does not specify an exact minimum loan. HUD allows their approved lenders to decide this. Due to the over 400 hours that it takes a HUD lender to process, underwrite, apply for and close the 223(f), minimum loan amounts under $3,000,000 are not profitable. HUD does set minimum loan amounts based on LTV, rate, and amortization.
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 |