HUD 221(d)(4) Developer Requirements & Fees

Developers interested in taking out an HUD multifamily construction loan like the HUD 221(d)(4) loan must meet certain requirements and also pay certain fees.

Requirements

  • The general contractor must pay Davis-Bacon wage rates (required by the Department of Labor)

  • After construction is completed, both the general contractor and owner must submit a cost certification

  • In addition to submitting the required general contractor information, the general contractor must also provide either:

    • a 100% performance and payment bond

    • or a 15-20% cash escrow

    • or a FHA-accepted letter of credit

  • The general contractor must also have a liquid net worth of at least 5% of the project’s construction contract and additional uncompleted construction work

FHA-HUD-Multifamily-Loan-Contractor-Info.jpeg

Fees

  • $25,000 application fee. Covers lender’s due diligence and third-party reports:

  • 0.50% FHA inspection fee (paid from mortgage proceeds)

  • 0.30% FHA exam fee (paid in two payments - 0.15% at pre-application, 0.15% at application)

  • Financing and placement fees: usually capped at 3.50% of the loan amount. Paid from mortgage proceeds at closing

  • Good-faith deposit (commitment and rate lock): between 0.50% and 1% of loan amount. Paid at commitment, refunded at closing

  • Standard borrower closing costs such as lender's legal, title, and others

Source: https://www.hud.loans/fha-221d4


TO LEARN MORE ABOUT HUD 221(D)(4) LOAN OPTIONS, FILL OUT THE FORM BELOW AND A HUD LOAN EXPERT WILL GET IN TOUCH.