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
Resources
HUD 221(d)(4) FAQsGlossaryMultifamily Insurance
Developers
General Contractor RequirementsDeveloper Requirements & Fees3rd Party Reports & GuidelinesAppraisal ProcessMarket StudyArchitectural and Engineering ReportsDavis Bacon WagesEnvironmental Assessments
Forms
Typical Loan TimetableDetailed Operating Statement & Underwriting AnalysisEstimate of Replacement & Construction Costs
For Brokers
About
About HUD 221(d)(4) LoanContact usLeadership
(561) 556-4747
Get financing →
Newly Published
Dec 20 at HUD 221(d)(4) Loans
What Is DSCR (Debt Service Coverage Ratio)?
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?
Explore the Janover Network
May 8 at HUD Loans
The 2025 Developer's Guide to HUD Lender Matching
Apr 22 at Janover Inc. Investor Relations
Janover Inc. Announces Corporate Name Change to DeFi Development Corporation
Apr 16 at Janover Inc. Investor Relations
Janover Inc. to Host X Spaces Conversation on NAV Premiums
Was This Article Helpful?
HUD & FHA Glossary
1 min read

What are Multifamily Rentals?

Multifamily rentals, also referred to multi-dwelling units (MDUs) are separate housing units contained in a single building or several buildings. Some examples include duplexes, triplexes, and apartment buildings. Another common example is a mixed-use building, which combines residential and commercial spaces in one structure.

Start Your Application and Unlock the Power of Choice Experience expert guidance, competitive options, and unparalleled industry expertise.
Click Here to Get Quotes →
$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by a Credit UnionClick Here to Get Quotes!

Multifamily Rentals and the HUD 221(d)(4) Loan Program

Multifamily rentals, also referred to multi-dwelling units (MDUs) are separate housing units contained in a single building or several buildings. Some examples include duplexes, triplexes, and apartment buildings. Another common example is a mixed-use building, which combines residential and commercial spaces in one structure. HUD 221(d)(4) loans can finance apartment buildings with 5+ units, as well as certain mixed-use projects with 5+ residential units, as long as commercial units are limited to 25% of the net rentable area and 15% of the underwritten effective gross income of the property (up to 30% of underwritten EGI permitted in urban renewal areas under Section 220).

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 a multifamily rental property?

A multifamily rental property, also known as a multi-dwelling unit or MDU, is a single building or several buildings with multiple yet separate housing units. Common examples include apartment buildings, duplexes, triplexes, quadplexes, and mixed-use properties. HUD 223(f) loans are available for multifamily properties with 5+ units and can also be used for mixed-use properties, as long as commercial tenants do not occupy more than 25% of net rentable area and do not generate more than 20% of the project's effective gross income. For more information, please visit HUD 223(f) Loans and What is a Multifamily Rental?

What are the benefits of investing in multifamily rental properties?

The major benefit of investing in multifamily properties is the guarantee of reliable monthly cash flow from renters. Since multifamily properties are rented out to multiple individuals or families, there’s a reduced risk of vacancies — even if a tenant moves out, you can anticipate rental income from the remaining occupied units. Additionally, in a strong rental market, you will be able to fill vacancies fast, getting back to the initial, higher cash flow.

A huge benefit of buying your first multifamily investment property early is the ability to take advantage of compounding returns. Over time, small amounts of money invested into multifamily properties can grow exponentially due to the power of compounding returns. This means that the earlier you start investing in multifamily, the more wealth you’ll have in the long run.

Investing in apartment buildings early can also help you diversify your investment portfolio. One of the main benefits of apartment investing is how relatively low risk the asset class is. If the market crashes, that may well wipe out your 401(k) — but odds are, your apartment buildings will be doing just fine.

Sources: The Pros and Cons of Multifamily Investing, The Pros of Investing in Apartments Early

What types of financing are available for multifamily rental properties?

When an investor is looking at residential properties, they are likely going to be looking for conventional mortgage loans that are similar to what would be used for a single-family home. If you aren’t going to be living in the home and you are just using it for an investment, conventional loans tend to be the only option available to you.

However, if you are going to be living in one of the units on the property, it becomes “owner-occupied,” which provides some more options. In those cases, you might also be able to use VA loans or FHA loans since you are technically still living on the property.

For example, if you were buying a triplex, and you live in one of the units while renting out the other two, you would be able to choose from those other loan options. This is because they will generally require that the owner lives in the home that is being financed.

With these loans, you will find that they work the same as a regular loan for a single-family property. This means the down payments are going to be about the same.

What are the requirements for obtaining a loan for a multifamily rental property?

To qualify for a multifamily loan, borrowers typically need to have good credit (660+ is usually ideal) and between 25-30% of the total loan amount as a down payment. In addition, the property itself will need to have a debt service coverage ratio (DSCR) of 1.25-1.30x. This means that the building’s income will need to exceed its annual debt service by at least 25-30%.

What are the tax implications of owning a multifamily rental property?

Investing in multifamily properties comes with several tax incentives. It’s possible to deduct operating expenses and maintenance costs, including management fees, insurance, and marketing costs, or any legal and professional services, such as property management companies. Additionally, investors should be aware of potential capital gains taxes when investing in commercial or multifamily property. When it comes to real estate taxes, the more you know, the more money you can save.

For more information, please see the following sources:

  • The Pros and Cons of Multifamily Investing
  • Capital Gains Taxes for Multifamily and Commercial Real Estate Investors

What are the risks associated with investing in multifamily rental properties?

The risks associated with investing in multifamily rental properties include construction costs that have risen dramatically over the past few years, construction delays due to supply chain issues, and the possibility that the renovation work may not be enough to get the desired investment outcome. Additionally, buying multifamily properties is significantly more expensive than buying single-family homes, and buyers should be able to come with around a 20% downpayment, depending on the real estate market or the size of the property. Source 1, Source 2

In this article:
  1. Multifamily Rentals and the HUD 221(d)(4) Loan Program
  2. Related Questions
  3. Get Financing
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
  • Multifamily Rentals
  • MDUs
  • HUD Multifamily Rentals

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: Your Partner in Growth

At Janover, we offer a wide range of services tailored to your unique needs. From commercial property loans and LP management to business loans and services for lenders, we're here to help you succeed.

Learn more about Janover →
Commercial Property Loans

Get the best CRE financing on the market.

Explore Financing Options →
LP Management

Syndicate deals on autopilot with Janover Connect.

Discover LP Management →
Business Loans

Match with the right kind of loan, in record time.

Find Business Loans →
For Lenders

Supercharge your loan pipeline. Unlock more deals.

Boost Your Loan Pipeline →
HUD 221(d)(4) Loans

HUD 221(d)(4) Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Commercial Real Estate Loans, SBA7a Loans, HUD Loans, Janover Insurance, Janover Pro, Janover Connect, and Janover Engage.

Janover Tech Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487
(561) 556-4747 
[email protected]

Site Information

Privacy Policy
Terms of Use


For Commercial Mortgage Brokers

This website is owned by a 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.

This website utilizes artificial intelligence technologies to auto-generate responses, which have limitations in accuracy and appropriateness. Users should not rely upon AI-generated content for definitive advice and instead should confirm facts or consult professionals regarding any personal, legal, financial or other matters. The website owner is not responsible for damages allegedly arising from use of this website's AI.

Copyright © 2025 Janover Tech Inc. All rights reserved.

+

Fill out the form below and get the pricing and terms banks can't compete with.