What is Assumability?

Assumability and the HUD 221(d)(4) Loan Program

If a loan is assumable, it can be transferred to a new owner along with the property. All FHA multifamily loans are fully assumable, subject to FHA approval along with a fee of 0.05% of the original loan amount. This is a huge plus for HUD 221(d)(4) loan borrowers, since if a borrower wants to sell a property in the first 10 years after taking out a loan, they can avoid paying a prepayment penalty by having a borrower assume their loan.

In addition, assuming a HUD 221(d)(4) loan can also offer some huge benefits to a potential buyer. For one, they will assume the original borrower’s interest rate— which can be especially beneficial in an environment of rising interest rates (like the one we are currently.) Plus, they will be able to forego many, if not all, of the closing costs that can make HUD multifamily loans a somewhat pricey endeavor.


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.