HUD Multifamily Construction Loans 

Right now, the HUD 221(d)(4) loan is the only HUD-insured loan designed for ground-up construction of market-rate multifamily residential properties in the United States. Due to its incredibly attractive terms, the loan has become increasingly popular among developers. In many cases, the HUD 221(d)(4) program lets them save money and increases the long-term financial stability of their multifamily development projects. 

Keep reading to learn more, or click here to download our easy-to-understand HUD 221(d)(4) term sheet.

Features of the HUD 221(D)(4) Multifamily Construction Loan 

HUD 221(d)(4) loans have: 

• 40-year loan terms (+3 year interest only construction loan period, 43 years overall)

• Available for ground-up construction and substantial rehabilitation of properties with 5+ units

• A minimum loan amount of $4 million, no maximum loan amount (but subject to statutory limits)

• Highly competitive interest rates

• Non-recourse financing

• Are fully assumable (subject to FHA approval)

HUD 221(d)(4) Loan Eligibility and Requirements 

In addition to some of the requirements mentioned above, HUD 221(d)(4) borrowers must:

• Have a maximum LTV of:

  • 85% for market-rate properties

  • 87% for affordable properties

  • 90% for properties with 90% or more low-income units

• Have a bonded, licensed, and insured general contractor execute a GMP contract

Fees and Other HUD 221(d)(4) Information 

Developers should also understand that HUD 221(d)(4) loans: 

• Have a mortgage insurance premium (MIP) of:

  • 0.65% for market rate developments

  • 0.45% for new money LIHTC properties

  • 0.70% for Section 220 and certain LIHTC renewal projects

  • 0.25% for properties that qualify for a Green MIP reduction

• Have a HUD Application Fee of 0.3%

• Have a HUD Inspection Fee of 0.5%

• Require borrowers to pay for 3rd party reports, including:

  • Appraisal

  • Environmental assessment

  • Market study

  • Seismic assessment (if needed)

To learn more about HUD 221(d)(4) loans for multifamily construction and rehabilitation, fill out the form below and a HUD loan expert will get in touch.