Tap to get financing
HUD 221(d)(4) Loans
Information
Loan Facts Terms, Qualifications & GuidelinesInterest RateTerm SheetHUD Multifamily LoansStatutory LimitProcessRefinanceHUD Multifamily Construction Loans
Application
Application ProcessChecklist
Resources
HUD 221(d)(4) FAQsGlossaryMultifamily Insurance
Developers
General Contractor RequirementsDeveloper Requirements & Fees3rd Party Reports & GuidelinesAppraisal ProcessMarket StudyArchitectural and Engineering ReportsDavis Bacon WagesEnvironmental Assessments
Forms
Typical Loan TimetableDetailed Operating Statement & Underwriting AnalysisEstimate of Replacement & Construction Costs
For Brokers
About
About HUD 221(d)(4) LoanContact usLeadership
(561) 556-4747
Get financing →
Newly Published
Dec 20 at HUD 221(d)(4) Loans
What Is DSCR (Debt Service Coverage Ratio)?
Jun 14 at HUD 221(d)(4) Loans
What is Underwriting?
Jun 14 at HUD 221(d)(4) Loans
What are the Benefits of Non-Recourse Loans?
Explore the Janover Network
May 8 at HUD Loans
The 2025 Developer's Guide to HUD Lender Matching
Apr 22 at Janover Inc. Investor Relations
Janover Inc. Announces Corporate Name Change to DeFi Development Corporation
Apr 16 at Janover Inc. Investor Relations
Janover Inc. to Host X Spaces Conversation on NAV Premiums
Was This Article Helpful?
4 min read

HUD 221(d)(4) Appraisal Process

HUD 221(d)(4) Appraisal Process Everything you need to know about the appraisal process for HUD 221(d)(4) loans.

In this article:
  1. The HUD Multifamily Appraisal Process
  2. HUD 221(d)(4) Appraisals: The Basics
  3. Basic, Neighborhood and Site Information  
  4. Income Estimate, Amenities, and Services 
  5. Unit rating, project rating, and annual expenses
  6. Financial Metrics 
  7. To lean more about how a HUD 221(d)(4) loan can fund your multifamily project, fill out the form below and an expert HUD loan advisor will get in touch.
  8. Get Financing
Start Your Application and Unlock the Power of Choice Experience expert guidance, competitive options, and unparalleled industry expertise.
Click Here to Get Quotes →
$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by a Credit UnionClick Here to Get Quotes!

The HUD Multifamily Appraisal Process

HUD 221(d)(4) Appraisals: The Basics

One of the most important third-party reports required in the HUD 221(d)(4) application process is the appraisal. During the appraisal, a qualified property appraiser will examine the development project to determine its potential value, income, and profitability. All of this means that before ordering a HUD site appraisal, owners/developers need to be extremely prepared, and engage in constructive discussions with their architectural firm, their lender, and their general contractor. This information has been taken directly from the HUD Multifamily Summary Appraisal Report. 

Basic, Neighborhood and Site Information  

The first part of the appraisal process for HUD multifamily construction loans reviews information about the general site layout, construction plans, and an analysis of the local real estate market, including the growth rate and various applicable trends. 

  • Basic information, including:

    • Address

    • Project size and type

    • Number of units

    • Number of buildings

    • Building foundation information

    • Basement floor information

    • Planned recreation areas

  • Neighborhood information, including:

    • Growth rate

    • Area type (urban, suburban, rural)

    • Property values

    • Demand/supply

    • Rent controls

    • Present land use (i.e. commercial, multifamily, 2-4 family, vacant, etc.)

    • Predominant occupancy (i.e. owner, tenant, vacant)

  • Site information, including:

    • Dimensions

    • Zoning compliance (legal, illegal, legal nonconforming (grandfathered))

    • Market rent plans (percentages of low end/high end, rent restricted, etc.)

  • Additional property information, including:

    • Date acquired

    • Purchase price

    • Additional costs paid or accrued

    • Relationship between buyer and seller

    • Utilities on-site

    • Unusual site features (rock formations, cuts, fills, retaining walls, etc.)

  • Income Estimate, Amenities, and Services 

    The next parts of the HUD 221(d)(4) appraisal process will review the estimated income that the project can generate on a monthly basis. It will review factors like the number of units and how much income they can produce, as well as other sources of income, like parking. The appraiser will also list any features or amenities that are available to residents, including both those that are inside the unit (i.e. kitchen appliances, patios, unit security systems) and those for the project as a whole (i.e. tennis courts, swimming pools, building security systems.) By doing this, the appraiser can help determine the financial viability of the project, as well as get an idea of what the project has to offer potential residents. 

    • Estimate of income, including:

      • Number of each family unit type

      • Rentable living area (sq. feet)

      • Composition of units

      • Unit rent per month

      • Total monthly rent per unit type

      • Laundry fees

      • Commercial income (with attached documentation)

      • Off-street parking and other non-commercial ancillary income

      • Total estimated monthly gross income at 100% occupancy

      • Non-revenue producing spaces (i.e. rooms for live-in employees)

      • Personal benefit expenses (i.e. utility expenses for live-in employees)

    • And, including: 

      • Exercise rooms

      • Sauna/steam rooms

      • Tennis courts

      • Racquetball courts

      • Coin laundry facilities

      • Picnic or play areas

      • Swimming pools

      • Community rooms

      • Jacuzzis/community whirlpools

      • Amenities and services included in rent, such as:

        • Gas or electric ranges

        • Gas or electric fridges

        • Microwaves

        • Balcony/patio

        • Carpet

        • Disposal/compactor

        • Dishwasher

        • Window treatments

        • Washer/dryer (in units)

        • Unit/project security systems

      • Unit rating, project rating, and annual expenses

        The next parts of the HUD multifamily appraisal process consists of unit ratings. These involve an examination of the suitability and adequacy of individual units and their features, and a project rating. This examines the quality and livability of the project as a whole. They also examine the annual expenses of the project in order to compare them against the project's projected income. 

        • Unit rating, consisting of:

          • Room size and layout

          • Adequacy of closets and storage

          • Adequacy of plumbing

          • Adequacy of soundproofing

          • Adequacy of electrical

          • Livability

          • Marketability

        • Project rating, consisting of:

          • General appearance

          • Amenities and recreational facilities

          • Density (units per acre)

          • Unit mix

          • Quality of construction

          • Condition of exterior

          • Condition of interior

          • Vertical and horizontal soundproofing

        • Estimate of annual expense, consisting of:

          • Administrative costs (advertising and management)

          • Maintenance costs, including:

            • Decorating

            • Repairs

            • Exterminating

            • Insurance

            • Ground expense

          • Operating costs, including:

            • Elevator expenses

            • Fuel (heating and domestic hot water)

            • Lighting and misc. power

            • Water

            • Gas

            • Garbage and trash removal

            • Payroll

          • Tax costs, including:

            • Real estate, estimated assessed value

            • Personal property, estimated assessed value

            • Employee payroll tax

        • Financial Metrics 

          During the final part of the HUD appraisal process, the appraiser reviews a variety of financial metrics, which helps them determine the project's potential financial health. These include income computations, estimates of legal and organizational costs, and other metrics. 

          • This information includes:

            • Income computations

            • Estimated replacement cost

            • Carrying charges and financing

            • General fees

            • Legal, organization and audit fee

            • Estimate of operating deficit

            • Project site analysis and approval, including:

              • Location and neighborhood acceptability

              • Utility site availability

              • Size/site adequacy

              • Site zoning permissions (accepted use)

              • Market analysis (i.e. will people rent at the proposed price?)

            • Value fully improved

            • Acquisition cost

            • Other costs

            • Value of land and cost certification

            • Income approach to value

            • Comparison approach to value

            • Reconciliation

            • Construction cost analysis (must be completed by a construction cost analyst)

          • To lean more about how a HUD 221(d)(4) loan can fund your multifamily project, fill out the form below and an expert HUD loan advisor will get in touch.

          In this article:
          1. The HUD Multifamily Appraisal Process
          2. HUD 221(d)(4) Appraisals: The Basics
          3. Basic, Neighborhood and Site Information  
          4. Income Estimate, Amenities, and Services 
          5. Unit rating, project rating, and annual expenses
          6. Financial Metrics 
          7. To lean more about how a HUD 221(d)(4) loan can fund your multifamily project, fill out the form below and an expert HUD loan advisor will get in touch.
          8. Get Financing

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →

Janover: Your Partner in Growth

At Janover, we offer a wide range of services tailored to your unique needs. From commercial property loans and LP management to business loans and services for lenders, we're here to help you succeed.

Learn more about Janover →
Commercial Property Loans

Get the best CRE financing on the market.

Explore Financing Options →
LP Management

Syndicate deals on autopilot with Janover Connect.

Discover LP Management →
Business Loans

Match with the right kind of loan, in record time.

Find Business Loans →
For Lenders

Supercharge your loan pipeline. Unlock more deals.

Boost Your Loan Pipeline →
HUD 221(d)(4) Loans

HUD 221(d)(4) Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Commercial Real Estate Loans, SBA7a Loans, HUD Loans, Janover Insurance, Janover Pro, Janover Connect, and Janover Engage.

Janover Tech Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487
(561) 556-4747 
[email protected]

Site Information

Privacy Policy
Terms of Use


For Commercial Mortgage Brokers

This website is owned by a company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

This website utilizes artificial intelligence technologies to auto-generate responses, which have limitations in accuracy and appropriateness. Users should not rely upon AI-generated content for definitive advice and instead should confirm facts or consult professionals regarding any personal, legal, financial or other matters. The website owner is not responsible for damages allegedly arising from use of this website's AI.

Copyright © 2025 Janover Tech Inc. All rights reserved.

+

Fill out the form below and get the pricing and terms banks can't compete with.