HUD 223(f) Lockouts

Lockouts in Relation to HUD 223f Financing

Lockouts in Relation to HUD 223f Financing

Like many multifamily loans, HUD 223(f) loans have various prepayment provisions, which include certain prepayment penalties. One common prepayment provision is called a lockout, which prevents a borrower from repaying a loan at all for a specific period of time. While all prepayment provisions are negotiable for HUD 223(f) loans, lenders will typically insist on a lockout period of between 0 and 2 years. 

Do HUD 223(f) Loans Have Prepayment Penalties? 

Do HUD 223(f) Loans Have Prepayment Penalties? 

Like many types of multifamily financing, HUD 223(f) loans typically have prepayment penalties-- fees that are charged to the borrower if they attempt to pay off the loan early. HUD 223(f) prepayment penalties are negotiable, and can vary by lender, but often include a 0-2 year lockout, followed by a 8-10% to 1% declining prepayment penalty.