What is Substantial Renovation?

Substantial Renovation and the HUD 221(d)(4) Loan Program

As defined by HUD, substantial rehabilitation of HUD-assisted multifamily rental housing occurs in one of the following circumstances: 

  • “when the required repairs, replacements, and improvements involve the replacement of two or more major building components, or

  • “the costs of the rehabilitation exceed the greater of 15 percent (exclusive of any soft costs) of the property's replacement cost (fair market value) after completion of all required repairs, replacements, and improvements; or $6,500 per dwelling unit (adjusted by HUD's authorized high cost percentage); or 20 percent of the mortgage proceeds applied to rehabilitation expenses.”


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.