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
Knowledge base
HUD 221(d)(4) FAQsGlossary
Developers
General Contractor RequirementsDeveloper Requirements & Fees3rd Party Reports & GuidelinesAppraisal ProcessMarket StudyArchitectural and Engineering ReportsDavis Bacon WagesEnvironmental Assessments
About
About HUD 221(d)(4) LoanContact usLeadership
Forms
Typical Loan TimetableDetailed Operating Statement & Underwriting AnalysisEstimate of Replacement & Construction Costs
Get financing
Newly Published
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?
Jun 14 at HUD 221(d)(4) Loans
Market Rate vs. Affordable Properties in Relation to HUD 221(d)(4) Loans
Explore the Janover Network
Mar 24 at Multifamily Loans
The Best 3 Multifamily Loans for Affordable Housing in 2023
Mar 20 at Multifamily Loans
Multifamily Minute Reader Reflections: How Will Bank Failures Impact Multifamily?
Mar 17 at Commercial Real Estate Loans
Top 10 Commercial Real Estate Lenders of 2023
Was This Article Helpful?
Last updated on Nov 8, 2022
4 min read

HUD 221(d)(4) Loan Process

Everything developers and investors need to know about the process for HUD 221(d)(4) loans, the market's best source of non-recourse multifamily and apartment construction financing.

Better Financing Starts with More Options Start Your Application and Unlock the Power of Choice. Click Here to Get Quotes →$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get Quotes
In this article:
  1. HUD 221(d)(4) Loan Process 
  2. Stage 1: Initial Research to Pre-Approval
  3. Does my project qualify for HUD 221(d)(4) financing? 
  4. How do I get pre-approved for a HUD 221(d)(4) loan? 
  5. Stage 2: The Firm Application Process 
  6. Stage 3: Rate Lock and Closing 
  7. What happens after HUD 221(d)(4) closing? 
  8. To learn more about the HUD 221(d)(4) process, fill out the form below and an expert HUD loan advisor will get in touch.
  9. Get Financing

HUD 221(d)(4) Loan Process 

If you're an investor or developer who is interested in taking out a HUD 221(d)(4) loan for building or significantly rehabilitating a multifamily property, it helps to understand the entire process.

From start to finish, the average HUD 221(d)(4) process can take around 11-12 months, though this may be longer (especially if any unknown issues arise). However, the process could be shorter, especially if the property qualifies for the HUD Multifamily Accelerated Processing (MAP) system. In some cases, MAP may be able to cut down the process to as little as 6 months. 

Stage 1: Initial Research to Pre-Approval

One of the first steps for any interested investor or developer is doing significant research on the HUD 221(d)(4) program-- and this website is a great place to start. At the very least, we recommend consulting our loan facts, checklist, developer requirements and fees guide, and our typical loan timetable.

Does my project qualify for HUD 221(d)(4) financing? 

Before beginning the actual loan process, you should make sure your project qualifies for the loan. Eligible projects must:

  • Have a loan amount of more than $2 million (average loan is $15 million+)

  • Have 5+ units

  • Have a potential LTV of no more than:

    • 85% for market rate properties

    • 87% for affordable properties

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

  • Fill a market need and have an excellent chance of creating positive income

How do I get pre-approved for a HUD 221(d)(4) loan? 

If you think your project fits within the general guidelines for HUD multifamily construction loans, you should begin working with your lender and other professional advisors to prepare a concept summary, and submit it to HUD. If HUD believes your project has potential, they will invite you to begin the pre-application process. At this point, you'll need to: 

  • Hire third party contractors to complete:

    • A limited appraisal

    • A market study

    • Environmental reports

  • Complete HUD questionnaires

  • Work with your lender to help them complete the underwriting process

At this point, usually about 3 months into the process, you and your lender will submit a pre-application to HUD, and you will need to pay a 0.15% approval fee. 

Stage 2: The Firm Application Process 

If your pre-application is approved (which may take some time), HUD will typically issue an Invitation Letter to Proceed With Firm Application about 5.5 months into the process. At this point, you'll need to: 

  • Have an architectural and engineering report completed (around the 6 month mark)

  • Address any architectural or engineering issues that have arisen

  • Work with a licensed appraiser to create a draft full appraisal

  • Work with your lender to complete Firm Application underwriting (should be complete around the 7 month mark)

  • Pay 0.15% of loan amount as a Firm Application submission fee (usually around month 8.5)

Assuming you and your lender have done everything correctly, HUD will likely issue a firm commitment. 

Stage 3: Rate Lock and Closing 

The final stages of the HUD 221(d)(4) process involve locking everything into place, including your interest rate. Usually, this involves: 

  • Working with your lender to receive a Lender's Funding Commitment

  • Locking your interest rate (typically requires 0.50% of the loan amount as a good faith deposit)

  • Working with your attorney to request title documentation and property surveys

  • Work with your lender to draft closing documents

  • Work with your lender and HUD (and your respective attorneys) to schedule a closing date

  • Close your loan (typically around the 11 to 12 month mark)

What happens after HUD 221(d)(4) closing? 

After closing, the construction or rehabilitation process begins. Remember, for the duration of your loan, you'll need to: 

  • Prepare for annual financial reviews

  • Keep 4% of the loan amount in escrow for replacement reserves

  • Place monthly insurance and tax costs into an escrow account

  • Continue to pay HUD MIP

To learn more about the HUD 221(d)(4) process, fill out the form below and an expert HUD loan advisor will get in touch.

In this article:
  1. HUD 221(d)(4) Loan Process 
  2. Stage 1: Initial Research to Pre-Approval
  3. Does my project qualify for HUD 221(d)(4) financing? 
  4. How do I get pre-approved for a HUD 221(d)(4) loan? 
  5. Stage 2: The Firm Application Process 
  6. Stage 3: Rate Lock and Closing 
  7. What happens after HUD 221(d)(4) closing? 
  8. To learn more about the HUD 221(d)(4) process, fill out the form below and an expert HUD loan advisor will get in touch.
  9. 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 logo

HUD 221(d)(4) Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

[email protected]

Site Information

Privacy Policy
Terms of Use

This website is owned by a private 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.

Copyright © 2022 Janover Inc. All rights reserved.