Because they offer fixed interest rates, longer terms, and greater leverage, this program is ideal for anyone thinking of purchasing or refinancing a multifamily rental property. Below are some basic facts about FHA 223f loans:

• These HUD multifamily loans are fixed-rate, fully amortizing, 35-year loans that are also non-recourse and fully assumable.

• Leverage of 87% LTV is available for market-rate properties. For subsidized properties, it can be up to 90%.

• The project’s original financing can be either FHA-insured or a conventional mortgage (or mortgages).

• Non-profit and for profit borrowers may apply.

• Can be used for affordable housing, cooperatives, and subsidized multifamily properties in any class of market rate property. They can also be used for rental assistance properties (tenant-based or project-based with a required 30-day minimum lease).

• Eligible properties must have a minimum of 5 residential units, each with a complete kitchen and bath. There is also a three-year stabilization requirement - substantial renovations must have been completed at least three years prior to application for HUD 223f mortgage insurance.

• Properties needing significant repairs or rehabilitation are excluded. Before a project can be eligible, all critical repairs must be completed before endorsement. Eligible properties should need no more than one major system to be replaced. However, some non-critical repairs are permitted after endorsement which must be completed with a year of closing.  

• Not every lender offers these types of mortgages, but only HUD-approved lenders.

• HUD Multifamily loans can be financed with GNMA (Government National Mortgage Association - Ginnie Mae) Mortgage-Backed Securities.

• There are no income-based restrictions for occupants of HUD 223(f) properties and no rent restrictions. The exception is any normal restrictions already in place for the property.