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HUD 221(d)(4) Loans
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About FHA 221(d)(4) Financing

FHA 221(d)(4) is mortgage insurance for HUD-approved lenders. It is authorized by the National Housing Act (12 U.S.C. 17151 (d)(4). Guaranteed by HUD, these FHA multifamily construction loans are the multifamily industry’s, "highest-leverage, lowest-cost, fixed-rate, non-recourse loan available in the business." It is also one of the best known and widely used HUD multifamily loan products on the market.
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High Leverage
Non-Recourse
Fixed-Rate

Major Benefits of the HUD 221(d(4) Loan

High loan-to-value ratio (LTV)

High loan-to-value ratio (LTV) allowance means that developers can get a larger loan with less money down. For the HUD 221(d)(4) program, market rate properties can qualify with 85% LTV, affordable properties with 87% LTV, and properties with 90% or more low-income units can qualify with a huge 90% LTV.

Non-recourse

Non-recourse means that developers and investors do not have to sign a PG (personal guarantee) to take on the loan. So, if they default on their mortgage, the lender can’t try to repossess their personal property to repay the loan.

Fixed-rate

Fixed-rate loans guarantee greater financial stability for investors and developers. This is because the interest rate won't go up or down during the life of the loan. Plus, these HUD multifamily construction loans have a maximum term of 40 years (43 with construction). This makes them incredibly attractive to investors.

Flexible loan size

Flexible loan size with a minimum of $4 million, and no maximum loan size. Most loans, however, are $15 million+

LIHTC

LIHTC: These HUD multifamily loans can be used with the federal government's Low Income Housing Tax Credit (LIHTC) program for affordable properties. This can save developers and investors significant amounts of money by giving them a 10-year tax deduction (provided the property qualifies).

BSPRA

HUD multifamily construction loans allow the general contractor (GC) to turn their profit into equity, deferring it until later. This program, called Builder Sponsor Profit Risk Allowance (BSPRA), can reduce the amount of cash needed at closing.

No income limits

The FHA 221(d)(4) loan is often used to create housing for moderate-income families, the elderly, and handicapped residents who have been priced out of the rental apartment market. However, there are no income limits for the FHA's multifamily financing program.

Low MIP

FHA MIP for HUD 221(d)(4) loans is 0.65% for market rate properties, 0.45% for Section 8 or LIHTC properties, 0.70% Section 220 urban renewal projects. In addition, ultra-low 0.25% green MIP is available for Energy Star-approved energy efficient development projects.

Special Tools for Developers and Investors

Designed to empower developers, builders, and investors, this website explains the FHA's role in multifamily construction financing. It introduces key terms, addresses FAQs and pros and cons, outlines the application process for HUD 221(d)(4) loans, explains developer fees, reviews the HUD multifamily appraisal process, and provides an easy-to-understand loan application checklist.

More HUD 221(D)(4) Resources for Developers 

In addition to the tools mentioned above, our site also provides: 

  • Our easy-to-read, downloadable HUD 221(d)(4) loan term sheet and our detailed term sheet explanation page

  • Our HUD 221(d)(4) typical loan timetable

  • Information on HUD multifamily statutory limits

  • A HUD 221(d)(4) refinance guide

  • Ultra-specific developer information, including:

    • Third party report guides (environmental assessment, architectural, market study)

    • Davis Bacon wage requirements for workers

    • General contractor requirements

Our site also offers risk-free consultations with highly-qualified HUD multifamily mortgage bankers. After reading our guide to HUD multifamily construction financing, reach out for a free quote and insight from our team of experts. 

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HUD 221(d)(4) Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

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