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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


Single asset and single purpose entity


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 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


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


Third Party Expense Deposit

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


One closing for both Loans - Construction & Permanent


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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