HUD 221(d)(4) Interest Rates
One of the most tangible benefits of HUD 221(d)(4) loans is their incredibly competitive fixed interest rates. Unlike some types of multifamily financing, which involve adjustable rate mortgages, HUD multifamily construction loan are always fixed-rate. No matter what happens with the market, their monthly debt expenses won't suddenly rise when interest rates go up.
In order to make sure the costs of a project stay consistent, many developers decide to opt for an interest rate lock. This can last between 30 to 180 days. However, developers who want to be particularly cautious can also choose an earlier rate lock, which is completed during the HUD 221(d)(4) approval process. In addition, it’s important for borrowers to remember that they will have to pay an annual MIP (mortgage insurance premium) on top of and above their regular interest rate.