Market Studies for HUD 221(d)(4) Loans

If you're serious about applying for a HUD 221(d)(4) loan, you'll need more than just a HUD multifamily appraisal for your project. You'll also need to hire a third-party contractor to complete a full market study. A market study, sometimes referred to as a valuation and market study, will examine a variety of the financial elements surrounding a potential FHA multifamily construction loan project to determine its economic viability. 

HUD Valuation Analysis 

The valuation analysis part of a HUD-approved market study examines factors including: 

  • Analyzing property as "collateral and security for a long-term mortgage"

  • Estimation of market value

  • Examines market need

  • Residential and commercial rents

  • Calculates projected expenses and estimated income

Other Valuation Inquiries 

In addition to examining these general valuation factors, a HUD-approved market study will also ask: 

  • What is the duration of the project's earning capacity? (i.e. will it improve or decline over time?)

  • Can rents pay:

Market Condition Analysis 

In addition to looking generally at the project itself, a market study examine the surrounding area to put the project in the proper economic and geographic context. 

Market Condition Study Variables 

Specifically, a market study will look at factors including: 

  • Geographic boundaries of the market area

  • General characteristics of the market area

  • Specific market conditions

  • Supply and demand estimate

  • Estimated absorption time

In general, market studies must have an effective date of within 120 days of submitting a pre-application. 


To learn more about how to apply for a FHA 221(d)(4) loan for your multifamily project, fill out the form below and a HUD loan specialist will get in touch.