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HUD 220

HUD 221(d)3

HUD 221(d)4

Eligible Properties

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

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

Borrower

Single asset and single purpose entity

Recourse

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

Loan Amount

No limits

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

Interest Rate

Interest only during construction phase, amortization during perm.

Amortization & Term

Maximum of 40 years or 75% of remaining economic life

Mortgage Insurance Premium

.65% each year during construction
.65% annually

Escrows

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

Federal Labor Standards

Federal prevailing wage & reporting requirements

Secondary Financing

Permitted under certain conditions at closing

Assurance Of Completion

Payment & performance bond or cash deposit/LOC

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

Financing Fees

Fees Negotiable

HUD Exam Fee

$3 per $1,000 of requested mortgage

HUD Inspection Fee

$3 per $1,000 of requested mortgage

Rate Lock Deposit

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

Application Fee

$5,000

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

Assumability

Fully assumable

Credit Enhancements

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

HUD Review Time

45 days pre-application; 45 days firm application

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.

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