HUD 221(d)(4) Application Process

As is the case with many government programs, HUD multifamily construction loans are time consuming and involve a lot of paperwork. For first-timers, having a HUD consultant who knows all the steps and theory behind HUD's multifamily loan strategy is crucial to successfully navigating the application process. In general, the entire application and approval process could take anywhere from 5 to 10 months.

Underwriting takes 180 days total— 90 days for a soft commitment and 90 days for a firm commitment. Every stage of the process has its own reports and paperwork that must be completed. To get a better idea of how long a particular project may take, check out our typical loan timetable

Application Costs and Mortgage Insurance Premiums 

The application cost is an upfront, non-refundable fee of 3/10 of a percent of the requested mortgage, half of which is non-refundable. During construction, there is a construction review fee of 45 basis points. Once construction is done, developers are also responsible for paying a project's MIP, Mortgage Insurance Premium, which is paid annually. It is:

  • 65 basis points for market rate properties

  • 45 basis points for Section 8 or new money LIHTC properties

  • 70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC

In addition, energy efficient projects may qualify for a green MIP reduction, which can result a heavily reduced 0.25% MIP. 


MAP-Approved Lenders

FHA Section 221(d)(4) financing is eligible for Multifamily Accelerated Processing (MAP). Borrowers (sponsors) work alongside a MAP-approved lender who submits requirements for the pre-application stage. After HUD reviews the lender's submissions, it will either 

  • invite the lender to apply for a Firm Commitment for mortgage insurance, or

  • decline the application

If the lender passes HUD’s pre-application stage, the lender then submits the Firm Commitment application to the local Multifamily Hub or Program Center for review. This includes a full underwriting package. 

If the proposal meets HUD 221(d)(4) requirements, the local Multifamily Hub or Program Center issues a commitment to the lender for mortgage insurance.



Non-MAP-Approved Lenders

Applications can be also submitted by non-MAP lenders, but are processed by HUD field office staff under Traditional Application Processing (TAP). In this scenario:

  • The sponsor has a pre-application conference with the local HUD Multifamily Hub or Program Center to determine the project’s preliminary feasibility

  • The sponsor must then submit

    • a site appraisal and market analysis (SAMA) application (for new construction) or

    • a feasibility application (for rehabilitation projects)

  • After HUD issues a SAMA or feasibility letter, the sponsor then submits a firm commitment application through a HUD-approved lender.

If the proposed project meets HUD 221(d)(4) requirements, the local Multifamily Hub or Program Center issues a commitment to the lender for mortgage insurance.


Additional Resources