Do HUD 223(f) Loans Place Limits on Rehabilitation Work?
HUD 223(f) Loans and Rehabilitation Limits
Unlike some other kinds of HUD multifamily loans, such as HUD 221(d)(4) loans, HUD 223(f) loans are not designed specifically for construction or rehabilitation. However, that doesn't mean that borrowers can't do some rehab work on their property. They just can't do a significant amount.
Specifically, HUD 223(f) loans allow for rehab work up to $15,000 per unit, which is multiplied by a local cost factor, often between 190-270%. In addition, renovations may not replace more than 50% of any two major building components, such as electrical systems, plumbing, mechanical systems, building structural systems, and the building envelope.
What Are the Local Cost Factors in Major Cities?
Here are a few examples of the local cost factors in major cities-- and how much per unit of renovations a borrower can make with a HUD 223(f) loan:
New York City: 270%: $40,500
Atlanta: 259%: $38,850
Fort Worth: 223%: $33,450
Los Angeles: 270%: $40,500