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FHA Multifamily & Apartment Loans 223 (f) Guidelines
Refinance, acquisition or moderate renovation of existing apartments and housing cooperatives. Offers up to 85% loan to value and a term and amortization period of 35 years.
- Purchases up to 85% loan-to-value and 92.5% loan-to-cost
- Refinance 85% LTV no cash out / 80% LTV with cash out.
- 35 year fixed rates / 35 year amortization / No balloon payment
- Avoid interest rate risk and costs associated with refinancing
- Property located in a declining value or distressed market and require up to 85% loan-to-value financing
- Property located in a smaller (population) market
- Require or prefer a non-recourse loan
- Flexible prepay - No yield maintenance or defeasance prepay risk
- Loan is assumable should you sell
- Available for profit and not-for-profit borrowers
- Detached structures and row houses eligible
- Require funds for repairs or improvements
- HUD FHA supplemental loan (2nd mortgage) available to fund property repairs or improvements
HUD FHA 223(f) Program Costs and Fees
- Third Party Reports: appraisal, engineering report, environmental analysis and flood certification
- FHA Inspection Fee: 1% of repair costs or $30 per unit if repairs are less than $3,000 unit
- FHA Exam Fee: $3 per $1,000 of the loan balance
- Financing Fee: 1%-3% depending on loan size and loan complexity
- Permanent Placement Fee: 1%-2%
- First Year Mortgage Insurance Premium: 1% of loan amount
- Monthly Mortgage Insurance Premium: .45%
- Borrower's Legal: Estimated at $10,000
- Title & Recording Fees: TBD
HUD FHA 223(f) Escrow and Reserves
- Tax and Insurance Impounds: Required
- Replacement Reserves: Required - Monthly deposit required and amount depends on property condition
- Initial Deposit to Reserve Fund: Required - One time deposit may be required depending on property condition
- Critical and Non-Critical Repair Escrow: May be required for properties with life, safety, health or code related repair and/or maintenance concerns
Eligible Properties
- Must contain five or more residential units and consist of complete living facilities including provisions for eating, cooking and sanitation
- Properties with fewer than five residential units will be considered if the aggregate of units exceeds five and all properties are contiguous
- Commercial area is permissible, but cannot exceed 20% of the net rental area, or 25% of the gross revenues
- Both market rate and affordability properties are eligible
- Student housing properties that offer rents per room, not per unit, are ineligibe
- 30 day minimum lease term required
- Three years must have elapsed since construction or substantial rehabilitation. For properties with fewer than three
years stabilization, a waiver may be granted to refinance debt only, no owner equity take out allowed
The loan may include repair costs not to exceed 15% of its value after repairs or no more than $6,500 per unit (except in
high cost areas) - whichever is greatest. Repairs may not include replacing more than one major building system such as plumbing or electric
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