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HUD/FHA

HUD/FHA 221(d)(4) + 220

New construction or substantial rehabilitation of market-rate or affordable multifamily properties.
SUBSTANTIAL REHABILITATION

Qualifies as substantial rehabilitation if the cost of repairs, replacements, and improvements exceeds $19,293 per unit adjusted by HUD’s high-cost factor.

COMMERCIAL SPACE

Eligible for up to 25% of net rentable area and 15% of EGI for 221(d)(4).
Eligible for up to 25% of net rentable area and 30% of EGI for 220.

BORROWER

Single asset, special purpose entity. Either for-profit or nonprofit.

MAXIMUM LOAN AMOUNT

The lesser of:

  • for market-rate properties, applicable factors: 87% LTC, 1.15x DSCR;
  • for affordable properties, applicable factors: 90% LTC, 1.11x DSCR; and
  • for properties with 90% or greater rental assistance, applicable factors: 90% LTC, 1.11x DSCR.

* Other parameters apply to mortgages over $125 million.
** Other than the above constraints, there are no minimum or maximum loan sizes.

TERM & AMORTIZATION

Interest only during the construction period, plus 40 years fully amortizing.

INTEREST RATE

Fixed-rate, subject to market conditions at the time of rate lock.

MORTGAGE INSURANCE PREMIUM

0.25%

RECOURSE

Non-recourse during both construction and permanent phases of financing.

ASSUMABILITY

Fully assumable, subject to HUD approval.

PREPAYMENT

Negotiable. Best rates typically have a 1–2-year lockout with a declining prepayment penalty for the remainder of the first 10 years.

THIRD PARTY REPORTS

Market study, appraisal, architectural, and costs review and Phase I ESA. Other reports as needed.

ESCROWS

Escrows for debt service, mortgage insurance premium, taxes, insurance, replacement reserves, and working capital and operating deficits are required.

FEDERAL LABOR STANDARDS

Davis-Bacon prevailing wages and reporting requirements.

ASSURANCE OF COMPLETION

Payment and performance bond or cash deposit/letter of credit.

HUD APPLICATION FEE

$3 per $1,000 of requested loan amount (1/2 due at pre-application).

HUD INSPECTION FEE

$5 per $1,000 of requested loan amount for new construction.
$5 per $1,000 of improvement costs for substantial rehabilitation.

 

This sheet sets out the general guidelines of a loan program and is designed solely as an aid to prospective borrowers and other clients. It does not represent or imply a contract or a commitment to lend funds. A commitment to lend funds may only be made by a written letter issued by NewPoint to a prospective borrower. This term sheet is subject to change at any time without notice at the sole discretion of NewPoint Real Estate Capital LLC.