Eligible Properties

New construction or substantial rehabilitation for family apartments market rates & affordable properties

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Substantial Rehab

​Qualifies as sub-rehab by meeting one of the following criteria:

a) The cost of repairs, replacements & Improvements exceeds the greater of 15% of the estimated replacement cost after completion of all repairs, replacements & improvements, or $6,500 per unit adjusted by HUD for the high cost percentage, or

b) Two or more major building components being substantially replaced

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Borrower

Single asset and single purpose entity

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Recourse

Fully non-recourse during both construction & permanent phases of financing

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Loan Amount

No limits

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Maximum Mortgage Limits

The lesser of:

a) 83.3% (87% for affordable) of HUD’s estimated cost plus land/as-is value

b) 1.20 DSCR (1.15 for affordable)

c) HUD statutory per unit limits

d) Higher limits for non-profits

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Interest Rate

Interest only during construction phase, amortization during perm.

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Amortization & Term

Maximum of 40 years or 75% of remaining economic life

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Mortgage Insurance Premium

.65% each year during construction
.65% annually

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Escrows

Escrows for taxes, insurance, replacement reserves & mortgage insurance premium are required

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Federal Labor Standards

Federal prevailing wage & reporting requirements

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Secondary Financing

Permitted under certain conditions at closing

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Assurance Of Completion

Payment & performance bond or cash deposit/LOC

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BSPRA

Builder & Sponsor’s Profit & Risk Allowance is used as a credit against the mortgagor’s
required equity contribution & is capped at 10% of development costs

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Financing Fees

Fees Negotiable

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HUD Exam Fee

$3 per $1,000 of requested mortgage

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HUD Inspection Fee

$3 per $1,000 of requested mortgage

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Rate Lock Deposit

Typically 1/2% of mortgage amount, refunded at closing

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Application Fee

$5,000

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Third Party Expense Deposit

Estimated at $30,000 for market study, appraisal, Plan and Spec Review & Phase 1
 

​Closing

One closing for both Loans - Construction & Permanent

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Assumability

Fully assumable

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Credit Enhancements

Can be used as Credit Enhancement for Tax Exempt Bonds and Low Income Tax Credits

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HUD Review Time

​45 days pre-application; 45 days firm application

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1) Property must have an average physical occupancy of 85% for six months prior to submission of application to HUD.

2) 50% cash out funded at cash out; remainder upon completion of non-critical repairs.