What are the terms and amortization of HUD multifamily construction loans/financing loans?
During construction, HUD multifamily construction loans are fixed and interest only (for up to 36 months). This is followed by an additional 40 years of fully amortized, fixed-rate payments. Altogether, there is a maximum term of 43 years, including construction.
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During construction, HUD multifamily construction loans are fixed and interest only for up to 36 months. This is followed by an additional 40 years of fully amortized, fixed-rate payments. Altogether, there is a maximum term of 43 years, including construction.
In comparison, the HUD's FHA 223(f) loan, which is intended only for the purchase or refinancing of existing multifamily developments, is a 35-year fully amortized, fixed-rate loan.
How Does Amortization Affect HUD 221(d)(4) Borrowers?
Since HUD 221(d)(4) loans are fully amortizing, borrowers will never have to worry about facing a large balloon payment at the end of the loan’s term. Since many non-HUD multifamily loans are partially amortizing, it’s common for borrowers to either pay a large balloon payment, refinance the loan, or sell the property before the term of the loan is up. This is not the case with HUD 221(d)(4) loans. Instead, borrowers can hold the property until it is fully paid off.
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Related Questions
What is the maximum loan amount for a HUD 221(d)(4) loan?
The maximum loan amount for a HUD 221(d)(4) loan is not limited. According to Apartment Loans, the minimum loan amount is $4 million, but exceptions are made on a case-by-case basis. Generally, most 221(d)(4) construction loans are $10 million and above. There is no maximum loan amount.
What is the maximum amortization period for a HUD 221(d)(4) loan?
The maximum amortization period for a HUD 221(d)(4) loan is 40 years, following a maximum 36 months for construction. HUD 221(d)(4) Construction & Rehab Loans and HUD 221(d)(4) Loans both provide this information.
What are the interest rates for HUD 221(d)(4) loans?
Interest rates for HUD 221(d)(4) loans are fixed throughout the life of the loan (both construction and permanent stages) and determined at commitment by prevailing market conditions. 30 to 80-day rate lock commitments are available. An early rate lock feature is available, allowing the borrower to lock the rate after preliminary underwriting. There is a 1% rate lock deposit payable at the time of rate lock, to be refunded at closing. More information about HUD 221(d)(4) loans.
What are the fees associated with HUD 221(d)(4) loans?
The fees associated with HUD 221(d)(4) loans include an application fee of usually $25,000 to cover lender due diligence and third-party reports, including an appraisal, phase 1 environmental, construction cost review, market study, and plans and specs review. Additionally, there is an FHA exam fee of 0.30% paid as 0.15% at pre-application and 0.15% at application, an FHA inspection fee of 0.50% paid from mortgage proceeds, financing and placement fees typically capped at 3.50% of the loan amount paid at closing from mortgage proceeds, a good-faith deposit (rate lock and commitment) between 0.50% and 1% of the loan amount paid at the time of commitment and refunded at closing, and lender's legal, title, and other standard borrower closing costs.
Source: https://www.hud.loans/fha-221d4 and https://apartment.loans/hud-221-d-4-loans
What is the minimum loan amount for a HUD 221(d)(4) loan?
The minimum loan amount for a HUD 221(d)(4) loan is $4 million. Exceptions are made on a case-by-case basis. Generally, most 221(d)(4) construction loans are $10 million and above. There is no maximum loan amount.
Source: HUD 221(d)(4) Loans
What is the minimum amortization period for a HUD 221(d)(4) loan?
The minimum amortization period for a HUD 221(d)(4) loan is 40 years, including the construction period. This is according to apartment.loans/hud-221-d-4-loans and www.hud.loans/fha-221d4.