What is the FHA (Federal Housing Administration)?
Created in 1934 by the National Housing Act, the FHA was set up to promote home construction and reduce unemployment. The FHA also operates a variety of loan insurance programs, like the FHA 221(d)(4) program that this website focuses on. Although the FHA insures lenders, it makes no loans and builds no properties.Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank at 6.1%$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1.4M offered by a Credit Union at 6.1%Click Here to Get Quotes!
The FHA (Federal Housing Administration) and the HUD 221(d)(4) Loan Program
Created in 1934 by the National Housing Act, the FHA was set up to promote home construction and reduce unemployment. The FHA also operates a variety of loan insurance programs, like the FHA 221(d)(4) program that this website focuses on. Although the FHA insures lenders, it makes no loans and builds no properties.
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.
What is the purpose of the Federal Housing Administration (FHA)?
The Federal Housing Administration (FHA), founded in 1934, is a U.S. government agency under the U.S. Department of Housing and Urban Development (HUD). The main purpose of the FHA is to insure residential real estate loans. The FHA also provides financing for multifamily builders and developers through its FHA 221(d)(4) loan program, HUD 223(f) loan program, HUD 232 loan program, and HUD 232/223(f) programs, among others. Source 1, Source 2.
What types of loans does the FHA offer?
The FHA offers a variety of loans under its various programs, including the 203(b) and 203(k) loan programs for single-family homes, duplexes, triplexes, and quadplexes. The FHA also insures loans for multifamily and healthcare properties under the HUD 221(d)(4), HUD 223(f), HUD 232, and HUD 223(a)(7) programs.
What are the eligibility requirements for an FHA loan?
Eligible borrowers for an FHA loan include for-profit, nonprofit, and public borrowers such as investors, developers, builders, and nonprofit entities. FHA and HUD require borrowers to be experienced owner-operators of similar facilities and have financial capacity and credit requirements that must be met. Additionally, if required by a designated State agency, a Certificate of Need must be submitted.
What are the benefits of an FHA loan?
FHA loans offer some of the best terms in the industry for the acquisition and refinancing of multifamily and apartment properties. These loans are non-recourse, offer high leverage, low interest rates, and lenient DSCR requirements. Additionally, FHA loans are fully assumable, which can be an amazing incentive for a would-be buyer of an apartment community looking to take advantage of an existing loan's lower, fixed interest rates.
For more information, you can read our blog post 5 Myths About FHA-Insured Multifamily Loans and our article What Are the Benefits of HUD 223(f) Loans?.
How do I apply for an FHA loan?
To apply for an FHA loan, you'll need to find an FHA licensed lender and get all your documentation and approval from the Federal Housing Administration (FHA). It's important to discuss your project with multiple FHA licensed lenders, so you can understand more about the process and the benefits and drawbacks of potential lenders.
If you're interested in getting financing to construct or renovate a multifamily residential property, getting an FHA 221(d)(4) loan can be one of the most cost effective ways to do so. But, to get an FHA/HUD 221(d)(4) loan, you'll need to do significant preparation.
What are the current FHA loan limits?
The current FHA loan limits are based on the median home prices in the area. The maximum loan amount for a single-family home is $331,760, and the maximum loan amount for a four-unit home is $636,150. The maximum loan amount for a two-unit home is $424,800, and the maximum loan amount for a three-unit home is $513,450. You can find the current FHA loan limits here.