The Best Source of HUD 223(f) Loan Information on the Internet
HUD 223(f) loans are the gold standard when it comes to getting a government-insured loan to purchase or refinance a multifamily property, and we want to do everything we can to help you get a HUD 223(f) loan for your project as quickly and easily as possible. As experienced capital markets advisors, we can't wait to help you take advantage of HUD’s fixed-rate, low interest, high-leverage, 35-year mortgages to acquire large multifamily properties at a low cost.
Investors Can Benefit from HUD 223(f)'s Generous Terms for Acquisitions and Refinances
With decades of experience in multifamily lending, we've seen the benefits of HUD 223(f) loans firsthand. Some of the most important benefits for borrowers include:
Flexible Loan Amounts: HUD 223(f) loans have a minimum loan amount of $1 million. However, exceptions may be made on a individual basis.
Long Mortgage Terms: The maximum mortgage term must be the lessor of 35 years or 75% of the project’s estimated remaining economic life. In addition, the term must be long enough to allow a 10-year mortgage.
Lenient DSCR Requirements: 1.18x DSCR for market rate properties, 1.15x DSCR for affordable properties, and 1.11x DSCR for rental assistance properties.
What are the Requirements for HUD 223(f) Loans?
While they have a variety of benefits, HUD 223(f) loans do have some requirements, which include:
Property Age and Condition: An eligible property must be at least three years old. For substantially rehabilitated properties, the work must have been completed at least three years prior. Standard, non-substantial repairs are allowed.
Replacement Reserves: Must be funded monthly. For older properties, initial funding of replacement reserves could be as much as $1,000 per unit.
Audits: Annual operational audits are required.
With $2.8 Billion of Loans Closed in 2017, the HUD 223(f) Program is Exploding In Popularity
While HUD's FHA 223(f) mortgage program has become more popular in the past decade, it's still misunderstood. A lot of market-rate multifamily owners and operators still think that FHA 223(f) loans are only designed for nonprofits, low-income housing, or affordable housing projects. As a result, they've missed out on one of the housing industry's most affordable and highest-leverage financing options.
The program offers long-term financing at low interest rates with longer amortizations than Fannie Mae, Freddie Mac or CMBS loans. Although they do take longer to originate (average origination times are four months from application to closing), the benefits often outweigh the waiting time. After all, that's only 60 days longer than the average closing for a Freddie Mac multifamily loan or a Fannie Mae DUS multifamily mortgage.
This comprehensive guide offers a review of HUD 223(f) mortgage insurance which is designed for existing multifamily rental properties. This guide introduces key terms, addresses FAQs, and outlines the application and approval process.