FHA 223f Loan Program Overview
HUD FHA 223f Apartment Loans are ideal for multifamily acquisitions or refinancing multifamily properties. HUD FHA 223f Apartment Loans are one of the most competitive multifamily loans in the nation.
FHA 223f Apartment Loans are guaranteed by HUD, through FHA, in the form of mortgage insurance. HUD FHA 223f Apartment Loans are used, most notably, to facilitate refinancing multifamily projects and for the acquisition and moderate rehabilitation of apartment projects which are at least three years old. However, the three year requirement can be waived in certain circumstances.
HUD FHA 223f Apartment Loans are eligible for the acquisition or refinancing of multifamily properties of 5 units or more and is a great financing option for borrowers looking for maximum leverage and longer fixed-rates and terms. There are no income or rent restrictions under Section 223f unless otherwise required by a project based HAP contract or other regulatory agreement. FHA 223f insured mortgages are non-recourse with no market restrictions. Click for FHA Apartment Loans Video
FHA Apartment Loans Terms Sheet
- 83.33% for market rate apartments
- 85% for affordable apartments
- 87% for rent subsidized apartments
An amount that achieves minimum Debt Service Coverage Ratio of
- 1.20×1 DSCR for market rate apartments
- 1.18×1 DSCR for affordable apartments
- 1.15×1 DSCR for rent subsidized apartments
Loan cannot exceed the programmatic per-unit maximum as adjusted by HUD for project location (local high cost factor).
- 83.33% for market rate apartments.
- 85% for affordable apartments.
- 87% for rent subsidized apartments.
- 1.20×1 for market rate apartments.
- 1.18×1 for affordable apartments.
- 1.15×1 for apartments with rental assistance.
- Replacement reserves required in accordance with HUD guidelines, minimum $250 per unit per year;
- Taxes and Insurance escrowed monthly;
- Phase One Environmental Assessment (ESA)
- Market Study (may be required in declining markets)
- Firm application typically submitted within 45-60 days of engagement; then
- Firm Commitment is typically issued within 60 days; then
- Closing normally occurs 30-45 days thereafter
- Certificates of Occupancy dated three years prior to date of application (subject to waiver)
- Pre-review is not required by HUD
- Davis Bacon prevailing wage requirements do not apply
- A replacement reserve will be funded at closing
- Annual audit of operations is required
- Hard second liens not allowed, soft seconds & stock pledge financing allowed with proper structure
FHA 223f Apartment Loans Key Takeaways
- HUD FHA 223f apartment loans provides borrowers with 35 year, fixed rate, non-recourse apartment financing.
- Loans can be used to finance the acquisition or refinancing of existing multifamily apartments.
- Eligible property types are market rate apartments, cooperative housing and multifamily affordable housing.
- Minimum loan amount $1,000,000 with no maximum loan amount.
- Loan terms determined by borrower from 10 to 35 years.
- FHA 223f apartment financing s non-recourse to the borrower.
Related And Similar Loan Products
- FHA 221d4 Apartment Construction Loans – HUD insured apartment loan with some of the same great terms, but for construction.
- FHA 223a7 Streamline Refinance Loans – Refinance existing FHA multifamily and healthcare loans at historically low mortgage rates.
- FHA 207 Mobile Home Park Loans – Loans for acquisition, construction, rehab or refinancing of mobile home parks with 50+ units.