When it comes to HUD multifamily loans, such as the HUD 223(f) loan, substantial renovation of a property occurs when the required repairs and improvements of a HUD-assisted multifamily rental housing involve replacing two or more major building components. Alternatively, substantial renovation can also occur when rehabilitation costs pass certain cost thresholds defined by HUD.
Subsidized Affordable Housing and the HUD 223(f) Loan Program
Using HUD’s subsidized affordable housing programs, tenants receive rent assistance for housing, but must pay at least 30% of their income towards housing costs (rent and utilities). Some examples include Section 8 Public Housing, HOPWA Facility-Based Housing, and Homeless Project-Based Units. Properties financed with HUD 223(f) loans are eligible for the Section 8 program, and, if they are already part of a HUD legacy program, such as the rent supplement, rental assistance payment, or Section 8 moderate rehabilitation programs, they can also qualify for the HUD Rental Assistance Demonstration (RAD) program. This can assist property owners in the process of making long-term improvements to their properties.