FHA 221(d)(4) Loans

Market Rate vs. Affordable Properties in Relation to HUD 221(d)(4) Loans

Market Rate vs. Affordable Properties in Relation to HUD 221(d)(4) Loans

One of the biggest questions that developers need to ponder before starting a HUD 221(d)(4) financed project is whether to include any affordable housing. Since a developer's goal is (naturally) to maximize profit, the obvious answer would be no. However, there are a variety of advantages to including at least some affordable units in a HUD multifamily construction loan project. 

Developer Fees for HUD 221(d)(4) Loans

Developer Fees for HUD 221(d)(4) Loans

When it comes to developer fees for HUD 221(d)(4) projects, eligibility can vary significantly from project to project. Affordable developments, as well as those using the LIHTC program, can often qualify for a developer fee. Typically, these developer fees can be anywhere between 10 and 15% of the eligible project costs.

Large HUD 221(d)(4) Loans: What You Need to Know

Large HUD 221(d)(4) Loans: What You Need to Know

While we mentioned in the loan facts section of this website that the minimum HUD 221(d)(4) loan is $2 million, and there is no upper limit, the reality can be a little bit more complex. While there technically is no financial ceiling for the program, particularly large loans are typically subject to stricter requirements, especially those involving DSCR and LTC

Can You Refinance a HUD 221(d)(4) Loan?

Can You Refinance a HUD 221(d)(4) Loan?

If you get a HUD 221(d)(4) loan to create a multifamily development, can you refinance that loan later? The answer is yes, and you can do use the HUD 223(a)(7) program to do so. The program, which is designed specifically for current HUD multifamily and healthcare borrowers to refinance their projects, offers some pretty amazing terms. 

HUD Seismic Assessments: What You Need to Know

HUD Seismic Assessments: What You Need to Know

One of the parts of the HUD loan application and approval process is getting a HUD seismic assessment, which is needed if your HUD 221(d)(4) project is located in seismic zones 3 or 4. Seismic zones 3 and 4 (based on 1997 UBC seismic zone maps) are generally located in areas including all of California, large amounts of Alaska and Hawaii, some Oregon, Washington, and Nevada, and a small amount of Tennessee, Kentucky, Illinois, and Arkansas. 

Where do I find a HUD Multifamily Center?

Where do I find a HUD Multifamily Center?

If you're interested in getting a HUD 221(d)(4) loan, you'll likely have to do a lot of communication with your local HUD multifamily center. While your lender may do much of the coordination and communication with you (and/or for you), it may still important to for you to reach out your local HUD multifamily center with questions or concerns about the HUD multifamily construction loan process. 

What are the Pros and Cons of HUD 221(d)(4) Loans?

What are the Pros and Cons of HUD 221(d)(4) Loans?

What are the pros and cons of HUD 221(d)(4) loans? It's a great question, since these HUD multifamily construction loans are incredibly attractive to a variety of developers and investors. 

BSPRA: Builder Sponsor Profit & Risk Allowance in Relation to HUD 221(d)(4) Loans

BSPRA: Builder Sponsor Profit & Risk Allowance in Relation to HUD 221(d)(4) Loans

BSPRA, or Builder Sponsor Profit & Risk Allowance, is an additional 10% FHA 221(d)(4) loan credit, sometimes referred to as "paper equity," that can be added to the calculated replacement cost of the property. Specifically, BSPRA is calculated by taking 10% of the "hard costs" of the project, which does not including the land, and adding that to the total development costs.

LTC: Loan-to-Cost Ratio in Relation to HUD 221(d)(4) Loans

LTC: Loan-to-Cost Ratio in Relation to HUD 221(d)(4) Loans

When looking at traditional, single-family residential loans, loan-to-value ratio (LTV) is often one of the most important factors to examine. However, when we look at HUD multifamily construction loans, like the HUD 221(d)(4) loan, and other similar types of financing, loan-to-cost ratio (LTC) also becomes an important factor.

How long does it take for an HUD 221(D)(4) application to be approved?

How long does it take for an HUD 221(D)(4) application to be approved?

Just how long does it take to process an HUD 221(d)(4) loan? That depends. For a MAP one-stage application, the process will take about 5-7 months, whereas, for a MAP two-stage application, the process is more likely to take around 8-10 months. 

Do FHA/HUD 221(d)(4) loans allow for commercial development?

Do FHA/HUD 221(d)(4) loans allow for commercial development?

In today's market, many real estate developers want to mix both residential and commercial development into the same project-- for example, a multi-story residential apartment building, with a ground floor zoned for shops and restaurants. FHA/HUD 221(d)(4) loans can allow a developer to do this-- but only in specific situations. 

Are HUD Multifamily Construction Loans Assumable?

Are HUD Multifamily Construction Loans Assumable?

If you take out an HUD loan to build a multifamily property and want to sell it, can the new owner simply take on your existing mortgage? The answer is yes-- as long as they get approval from the FHA.