Leverage and the HUD 223(f) Loan Program
Leverage can be defined as the practice of financing assets with borrowed money. It also refers the amount of debt used to finance an asset. The asset is typically used as collateral for the purchase. A ‘highly leveraged’ company, investment, or property has more debt than equity. Lenders frequently place limits on the amount of leverage a borrower can utilize. For example, HUD 223(f) loans are limited in leverage to 85% LTV for market rate properties, 87% LTV for affordable properties, and 90% LTV for properties using rental assistance.