Cooperative Housing in Relation to HUD 223(f) Loans
Cooperative housing, also known as a housing cooperative, co-op, or housing companies, are membership-based cooperatives (or corporations) that own real estate. These usually consists of one or more residential buildings. Cooperative housing developments can be refinanced with a special variant of HUD 223(f) loans, the HUD 223(f) cooperative housing loan. These loans have terms including:
LTV: 65%, or 55% of loan-to-sell-out value (HUD now allows a waiver for affordable cooperatives that cannot reach the 55% loan-to-sell-out value threshold)
DSCR: 1.00x Minimum
Owner-Occupied Requirement: At least 75% of units must be owner-occupied (no more than 25% can be owned by investors)
Repair Allowance: Like other HUD 223(f) loans, 223(f) loans for cooperatives permit a repair allowance of up to $40,500 per unit.
Why Housing Cooperatives Refinance
A housing cooperative may decide to refinance for a variety of reasons, including making needed repairs, replenishing replacement reserves, improving curb appeal, or even making energy efficient improvements to the property. Whatever the reason a housing cooperative decides to refinance, a HUD 223(f) loan can be an effective way to help them do so.