CNA: Capital Needs Assessment in Relation to HUD 221(d)(4) Loans

Capital Needs Assessments: What You Need to Know 

A Capital Needs Assessment (CNA), sometimes referred to as a Physical Needs Assessment (PNA) is a type of report that can help owners and developers understand how much it will cost to maintain their project over time. That way, owner/developers, lenders, and property managers can work together to develop a smart budget, and can also create estimates of the life of various systems in the building (i.e. plumbing, electrical, insulation, etc.) Just like other third party reports, such as appraisals, environmental assessments, or market studies, creating a CNA will require the owner/developer to hire a qualified and experienced third party, in this case, an HUD CNA consulting firm. 

CNAs for HUD 221(d)(4) Substantial Rehabilitation and 10-Year Updates

In comparison to a CNA for new construction, which may not always be required, a CNA for a HUD 221(d)(4) substantial rehabilitation project needs to specifically address the components of the building that need to be addressed immediately. It must also address those that can be fixed or improved in the near future. In most cases, 10-year CNA updates are also required for HUD 221(d)(4) properties. This is so HUD can ensure that the project is properly maintained and will remain financially viable in the coming years. 

Use of the HUD CNA E-Tool Is Now Mandatory 

The CNA e-Tool, an online document submission system, helps standardize and streamline the entire Capital Needs Assessment process. Use of the CNA e-Tool became mandatory for new FHA multifamily mortgage applications on November 1st, 2017. 


To learn more about how an FHA 221(d)(4) loan can help finance your multifamily project, fill out the form below and a HUD loan specialist will get in touch.