HUD/FHA 221(d)(4) Loan Interest Rates
HUD/FHA 221(d)(4) Loans Have Fixed Interest Rates
Throughout the life of HUD multifamily construction loans (both construction and permanent stages), interest rates remain fixed. That means that investors and developers using HUD loans can rest easy knowing that their interest rates won't suddenly rise. As a result, estimating annual profit margins is significantly easier.
HUD/FHA 221(d)(4) Loans Are Interest Only During the Construction Period
Another benefits of HUD/FHA 221(d)(4) loans is the fact these loans are interest-only during the construction period. In brief, this provides for up to an additional three years of financing at the same fixed rate. Plus, as we just mentioned, these loans are being offered at highly competitive rates, despite the fact that borrowers are responsible for paying an annual MIP (mortgage insurance premium) of 0.65%. However, for borrowers who qualify for a green MIP reduction, those MIP rates can be reduced to 0.25%.