Tap to get financing
HUD 221(d)(4) Loans
Information
Loan Facts Terms, Qualifications & GuidelinesInterest RateTerm SheetHUD Multifamily LoansStatutory LimitProcessRefinanceHUD Multifamily Construction Loans
Application
Application ProcessChecklist
Knowledge base
HUD 221(d)(4) FAQsGlossary
Developers
General Contractor RequirementsDeveloper Requirements & Fees3rd Party Reports & GuidelinesAppraisal ProcessMarket StudyArchitectural and Engineering ReportsDavis Bacon WagesEnvironmental Assessments
About
About HUD 221(d)(4) LoanContact usLeadership
Forms
Typical Loan TimetableDetailed Operating Statement & Underwriting AnalysisEstimate of Replacement & Construction Costs
Get financing
Newly Published
Jun 14 at HUD 221(d)(4) Loans
What is Underwriting?
Jun 14 at HUD 221(d)(4) Loans
What are the Benefits of Non-Recourse Loans?
Jun 14 at HUD 221(d)(4) Loans
Market Rate vs. Affordable Properties in Relation to HUD 221(d)(4) Loans
Explore the Janover Network
Mar 24 at Multifamily Loans
The Best 3 Multifamily Loans for Affordable Housing in 2023
Mar 20 at Multifamily Loans
Multifamily Minute Reader Reflections: How Will Bank Failures Impact Multifamily?
Mar 17 at Commercial Real Estate Loans
Top 10 Commercial Real Estate Lenders of 2023
Was This Article Helpful?
HUD & FHA Glossary
Last updated on Feb 19, 2023
1 min read

What is an Affordable Property?

Affordable properties are those that have rents set at a rate that is considered affordable for low-to-moderate and low-income residents. These include properties constructed using tax subsidies to provide below-market rents for low-income people, seniors and/or individuals with disabilities.

Better Financing Starts with More Options Start Your Application and Unlock the Power of Choice. Click Here to Get Quotes →$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get Quotes

Affordable Properties and the HUD 221(d)(4) Loan Program

Affordable properties are those that have rents set at a rate that is considered affordable for low-to-moderate and low-income residents. These include properties constructed using tax subsidies (like the Low-Income Housing Tax Credit, or LIHTC) to provide below-market rents for low-income people, seniors and/or individuals with disabilities. Other affordable properties may take advantage of the HUD’s Section 8 program, which provides housing subsidizes to low-to-moderate and low-income residents.

Properties financed with HUD 221(d)(4) loans are eligible for both LIHTC and the Section 8 program, though the requirements of each program can vary. In general, affordable properties receive more favorable terms for HUD 221(d)(4) loans; as they have more relaxed LTV and DSCR requirements.

To learn more about HUD multifamily construction loans like the HUD 221(d)(4) loan, fill out the form below and a HUD lending expert will get in touch. 

Related Questions

What is an affordable property?

An affordable property is a multifamily property that provides below-market rents and takes advantage of either the HUD Section 8 program or Low Income Housing Tax Credits (LIHTCs). These properties are typically intended for seniors, low-income people, disabled individuals, or other disadvantaged groups. Affordable properties using the HUD Section 8 program are sometimes operated by non-profit groups, including some 501(c)(3) organizations.

For more information, please visit www.hud223f.loans/glossary/affordable-properties and www.hud223f.loans/hud-223f-faqs/hud-section-8.

What are the benefits of owning an affordable property?

Owning an affordable property can provide many benefits. According to HUD Loans, one of the biggest benefits is the ability to deliver consistent income to landlords. The Department of Housing and Urban Development agrees to cover any difference between a contracted, subsidized rental rate and what a resident can pay through the use of HAP contracts. This means that, even if a resident becomes unemployed, the government will pick up the tab in ensuring rent is paid.

According to Multifamily Loans, other benefits of owning an affordable property include:

  • Lower-cost properties can house multiple renters, which means more income for you, which can be used to pay down the property faster.
  • Affordable housing is considered to be a safe investment for investors.
  • These types of properties are often in high demand.
  • Having more units and more renters tends to mean a steady cash flow coming into the property.
  • When the rents are predictable, you can more easily predict how much you are going to be earning.

What are the eligibility requirements for an affordable property?

Eligibility requirements for an affordable property depend on the type of program used. For properties using the HUD Section 8 program, eligibility is based on the tenant's income and family size. For properties using the Low Income Housing Tax Credits program, eligibility is based on the tenant's income and the area median income.

For more information on eligibility requirements for HUD Section 8, please visit this page. For more information on eligibility requirements for Low Income Housing Tax Credits, please visit this page.

What types of affordable properties are available?

Affordable properties are typically intended for seniors, low-income people, disabled individuals, or other disadvantaged groups. Investors and developers who use a HUD 223(f) loan to acquire or refinance a multifamily property have the choice to make that property affordable. Typically, this involves providing below-market rents and taking advantage of either the HUD Section 8 program or Low Income Housing Tax Credits (LIHTCs).

What are the tax benefits of owning an affordable property?

Investors or developers may be able to take advantage of HUD’s Low-Income Housing Tax Credit (LIHTC) program, which offers tax incentives that can cover either 30% or 70% of a rehabilitation or development project’s costs. Additionally, investors or developers may also be in a strong position to utilize additional credits if a property or development is located within an Opportunity Zone.

How can I find an affordable property?

You can find an affordable property by taking advantage of either the HUD Section 8 program or Low Income Housing Tax Credits (LIHTCs). You can also look through county auditor websites for the areas in which you are interested in purchasing property, or look at apartment rental listings and use the owner contact information listed in order to determine if they are interested in selling. It is generally recommended to avoid contacting owners who have purchased a property in the last 1-4 years, as they are less likely to want to sell to you at a below-market price.

Sources:

  • HUD 223(f) Loans
  • How to Find Multifamily Properties for Sale
Categories
  • HUD 221(d)(4) Loan
  • HUD 221(d)(4) Loans
Tags
  • HUD 221(d)(4) Loan
  • HUD 221(d)(4) Loans
  • HUD 221d4
  • HUD Multifamily Construction Loans
  • HUD Affordable Property
  • Affordable HUD 221(d)(4)

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

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.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

[email protected]

Site Information

Privacy Policy
Terms of Use

This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

Copyright © 2022 Janover Inc. All rights reserved.