How do I apply for FHA multifamily construction loans/financing?
If you're interested in getting financing to construct or renovate a multifamily residential property, getting an FHA/HUD 221(d)(4) loan can be one of the most cost effective ways to do so. But, to get an FHA/HUD 221(d)(4) loan, you'll need to do significant preparation.
- Applying for Multifamily FHA/HUD Financing
- What You'll Need to Apply for an FHA/HUD 221(d)(4) Loan
- What You'll Need for a Firm Commitment
- Finding an FHA Licensed Lender
- To learn more about HUD 221(d)(4) loans, just fill out the form below and a HUD loan expert will get in touch.
- Related Questions
- Get Financing
Applying for Multifamily FHA/HUD Financing
If you're interested in getting financing to construct or renovate a multifamily residential property, getting an FHA 221(d)(4) loan can be one of the most cost effective ways to do so. But, to get an FHA/HUD 221(d)(4) loan, you'll need to do significant preparation.
What You'll Need to Apply for an FHA/HUD 221(d)(4) Loan
The first part of the FHA/HUD 221(d)(4) loan application process is called pre-application. During this part of the process, you'll need to provide your HUD office with a variety of information about your project, including a general description of the project, Form HUD-92013, “Application for Multifamily Housing Project,” the resumes of the owner, key principals of the project, location maps, site plans, photographs, environmental assessments, as well as a variety of other HUD forms and documents.
What You'll Need for a Firm Commitment
The second part of the HUD 221(d)(4) loan application process is called firm commitment. At this point, the HUD has given general approval to the project based upon what they currently know, but they still need to see more documentation before everything is set in stone. To pass through the firm commitment process to full loan approval, you'll need documentation including a transmittal letter and an Application for Multifamily Housing Project (Form HUD-92013) which has a fee of $3 per $1000 of mortgage. Plus, you'll also have to pass an intergovernmental review. On top of that, you should contact your local HUD office to see who you need to contact in the state where the property is located (and if any additional reviews are required).
In addition, you'll need to fill out Byrd Amendment paperwork, which is intended to make sure no illegal lobbying or lobbyist-based conflicts of interest are likely to occur as a result of the project. And, you'll also need to submit Form HUD-92013, in which you must disclose any recent legal actions regarding parties involved in the project. This is especially important if the legal actions are related to delinquent federal debt.
The FHA/HUD 221(d)(4) loan application process is relatively complex-- and borrowers need to submit far more than the documents we've mentioned here. To check out the full list of documents you'll need to apply for an FHA/HUD 221(d)(4) loan, visit our FHA/HUD 221(d)(4) loan checklist.
Finding an FHA Licensed Lender
Remember, in addition to getting all your documentation and approval from HUD, you'll need to find an FHA licensed lender, usually before you begin the approval process. It’s important to keep in mind that the FHA/HUD only insures the loan, and is not actually responsible for loaning the borrower any money. Therefore, it's a good idea to discuss your project with multiple FHA licensed lenders, so you can understand more about process and the benefits and drawbacks of potential lenders.
To learn more about HUD 221(d)(4) loans, just fill out the form below and a HUD loan expert will get in touch.
Related Questions
What are the eligibility requirements for FHA multifamily construction loans?
To be eligible for an FHA multifamily construction loan, you must meet the following requirements:
- You must be a for-profit entity or a non-profit organization.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must have a minimum of two years of experience in developing and/or managing multifamily housing.
- You must
What documents are required to apply for FHA multifamily construction loans?
To apply for FHA multifamily construction loans, you'll need to provide your HUD office with a variety of information about your project, including a general description of the project, Form HUD-92013, “Application for Multifamily Housing Project,” the resumes of the owner, key principals of the project, location maps, site plans, photographs, environmental assessments, as well as a variety of other HUD forms and documents. For more information, please visit this page.
What is the maximum loan amount for FHA multifamily construction loans?
The maximum loan amount for FHA multifamily construction loans will be the lesser of:
- Up to 90% of the value of a new construction project for for-profit entities and 95% for nonprofit entities
- The project’s maximum insurable amount as determined by HUD
- Up to 90% of the net operating income, which should include the first mortgage debt payment obligation
What is the interest rate for FHA multifamily construction loans?
The interest rate for FHA multifamily construction loans is 4.95% - 7.05%. This information comes from Multifamily Mortgage Rates (Updated Daily).
The HUD 221(d)(4) program is a fixed-rate construction and substantial rehabilitation loan. This product is fixed for 40 years plus up to 3 years for construction (43 years total). In the past year, HUD 221(d)(4) interest rates ranged lower than anywhere else in the industry. This information comes from How to Get the Lowest Rates and Longest Terms for Multifamily Financing.
How long does it take to get approved for FHA multifamily construction loans?
It typically takes around four months to close a HUD 223(f) loan, which is generally used for buying or refinancing multifamily properties. If you're looking to develop a market-rate or affordable property, a HUD 221(d)(4) loan can give you better terms than virtually any other construction loan.
What are the advantages of FHA multifamily construction loans?
FHA multifamily construction loans offer several advantages, such as better terms than virtually any other construction loan. According to Commercial Real Estate Loans, some of the advantages include:
- Non-recourse financing
- Fixed interest rates
- Long-term amortization
- Up to 40-year terms
- Up to 90% loan-to-cost
In addition, HUD 223(a)(7) loans can close in around 60 days and are fully assumable, making them an attractive option for buyers looking to take advantage of existing loan's lower, fixed interest rates. For more information, visit Commercial Real Estate Loans and HUD Loans.