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HUD 221(d)(4) Frequently Asked Questions
Last updated on Feb 19, 2023
1 min read

Does FHA multifamily construction financing place limits on rehabilitation work?

If you're considering applying for a FHA/HUD 221(d)(4) loan to rehabilitate a multifamily property, it's important to realize that there minimum FHA/HUD multifamily project size limits that must be met. Otherwise, the project won't be considered large enough to be eligible for the loan.

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In this article:
  1. FHA/HUD Multifamily Loan Rehabilitation Work Limits 
  2. FHA/HUD Loan Minimum Limits 
  3. To learn more about FHA 221(d)(4) financing, fill out the form below and a HUD loan specialist will get in touch. 
  4. Related Questions
  5. Get Financing

FHA/HUD Multifamily Loan Rehabilitation Work Limits 

If you're considering applying for a HUD 221(d)(4) loan to rehabilitate a multifamily property, it's important to realize that there are minimum FHA/HUD multifamily project size limits that must be met. Otherwise, the project won't fit into the FHA's multifamily loan guidelines-- and won't be considered large enough to be eligible for the loan. 

FHA/HUD Loan Minimum Limits 

In addition to the specific minimum limits of the loan in question, properties must meet one of the following requirements to qualify as ‘substantial rehabilitation' of a multifamily property. Replacements, repairs, and improvement costs for an existing property must be more than:  

  • 15% of the property’s replacement cost after of all work is completed OR
  • $6,500 per unit as adjusted by the local HUD office OR
  • Replacing two or more buildings, regardless of cost

To learn more about FHA 221(d)(4) financing, fill out the form below and a HUD loan specialist will get in touch. 

Related Questions

What types of rehabilitation work are eligible for FHA multifamily construction financing?

FHA/HUD Multifamily Loan Rehabilitation Work Limits: FHA/HUD Loan Minimum Limits

In addition to the specific minimum limits of the loan in question, properties must meet one of the following requirements to qualify as ‘substantial rehabilitation' of a multifamily property. Replacements, repairs, and improvement costs for an existing property must be more than:

  • 15% of the property’s replacement cost after of all work is completed OR
  • $6,500 per unit as adjusted by the local HUD office OR
  • Replacing two or more buildings, regardless of cost

What are the limits on rehabilitation work for FHA multifamily construction financing?

If you're considering applying for a HUD 221(d)(4) loan to rehabilitate a multifamily property, it's important to realize that there are minimum FHA/HUD multifamily project size limits that must be met. Otherwise, the project won't fit into the FHA's multifamily loan guidelines-- and won't be considered large enough to be eligible for the loan.

In addition to the specific minimum limits of the loan in question, properties must meet one of the following requirements to qualify as ‘substantial rehabilitation' of a multifamily property. Replacements, repairs, and improvement costs for an existing property must be more than:

  • 15% of the property’s replacement cost after of all work is completed OR
  • $6,500 per unit as adjusted by the local HUD office OR
  • Replacing two or more buildings, regardless of cost

What are the requirements for FHA multifamily construction financing rehabilitation work?

The requirements for FHA multifamily construction financing rehabilitation work are that replacements, repairs, and improvement costs for an existing property must be more than:

  • 15% of the property’s replacement cost after of all work is completed OR
  • $6,500 per unit as adjusted by the local HUD office OR
  • Replacing two or more buildings, regardless of cost

How much can be spent on rehabilitation work for FHA multifamily construction financing?

FHA/HUD Multifamily Loan Rehabilitation Work Limits: FHA/HUD Loan Minimum Limits

In addition to the specific minimum limits of the loan in question, properties must meet one of the following requirements to qualify as ‘substantial rehabilitation' of a multifamily property. Replacements, repairs, and improvement costs for an existing property must be more than:

  • 15% of the property’s replacement cost after of all work is completed OR
  • $6,500 per unit as adjusted by the local HUD office OR
  • Replacing two or more buildings, regardless of cost

What are the restrictions on rehabilitation work for FHA multifamily construction financing?

Yes, FHA multifamily construction financing does place limits on rehabilitation work. In addition to the specific minimum limits of the loan in question, properties must meet one of the following requirements to qualify as ‘substantial rehabilitation' of a multifamily property. Replacements, repairs, and improvement costs for an existing property must be more than:

Requirement Description
15% of the property’s replacement cost after of all work is completed The total cost of all replacements, repairs, and improvements must be more than 15% of the property’s replacement cost after all work is completed.
$6,500 per unit as adjusted by the local HUD office The total cost of all replacements, repairs, and improvements must be more than $6,500 per unit as adjusted by the local U.S. Department of Housing and Urban Development (HUD) office.
Replacing two or more buildings, regardless of cost Replacing two or more buildings, regardless of cost, qualifies as ‘substantial rehabilitation’.

What are the guidelines for FHA multifamily construction financing rehabilitation work?

The FHA/HUD Multifamily Loan Rehabilitation Work Limits are as follows:

  • Replacements, repairs, and improvement costs for an existing property must be more than:
  • 15% of the property’s replacement cost after of all work is completed OR
  • $6,500 per unit as adjusted by the local HUD office OR
  • Replacing two or more buildings, regardless of cost

For more information, please refer to the HUD 221(d)(4) FAQs.

In this article:
  1. FHA/HUD Multifamily Loan Rehabilitation Work Limits 
  2. FHA/HUD Loan Minimum Limits 
  3. To learn more about FHA 221(d)(4) financing, fill out the form below and a HUD loan specialist will get in touch. 
  4. Related questions
  5. Get Financing
Categories
  • HUD Multifamily Loans
  • FHA Multifamily Loans
Tags
  • HUD Multifamily Financing
  • HUD 221(d)(4) Loans
  • HUD Multifamily Construction Loans
  • FHA Multifamily Construction Loans
  • Non-Recourse Loans
  • Non-Recourse Multifamily Loans
  • HUD 221(d)(4) Substantial Rehabilitation

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