FHA HUD 221(d)(4) Multifamily Loan Program

Our FHA HUD Multifamily Loan Benefits

FHA HUD Multifamily Loan rates start as low as 5.64% (as of July 19th, 2024)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Financing up to 85% LTV
• Terms and amortizations up to 40 years
• Long term fixed rates
• Multifamily loans for construction and rehabilitation
• Quick pre-approvals with no cost and no obligation

FHA HUD 221(d)(4) Multifamily Loan Program

The FHA HUD 221(d)(4) multifamily loan program is one of the market’s best for developers looking to construct multifamily properties and for owners looking for substantial rehabilitation funds for their apartment buildings. This multifamily construction loan program offers the highest-leverage, longest fixed-rate terms available in the multifamily industry. Additionally, HUD 221(d)(4) loans are non-recourse and serve as a construction to perm loan option. The FHA 221(d)(4) multifamily loan begins with up to 3 years of interest only payments during the construction period and is followed by a fully amortizing term of up to 40 years. All in all, developers who choose this loan program can obtain a construction to perm loan option with a term of up to 43 years!

FHA HUD 221(d)(4) Multifamily Loan Program Loan Program Terms and Guidelines

Eligible Properties
Construction or substantial rehab of nationwide multifamily properties including market-rate, low income and subsidized housing.

Eligible Borrowers
Single-asset entities. Can be either for-profit or nonprofit entities. Must be bankruptcy remote

Commercial Space Allowance
In general, only up to 15% of effective gross income and 25% of net rentable area can be used as commercial space

Loan Purpose

  • Either the construction of an eligible multifamily property


  • The substantial rehabilitation of an existing multifamily property. To qualify as substantial rehabilitation, one of the following requirements must be met:
  • The total cost of repairs must be more than either 15% of the property’s after completion replacement cost or $6,500 per unit.
  • The replacement of at least two buildings in an apartment complex

Loan Amount

  • Market- rate properties- 85% LTC and 1.2 DSCR
  • Affordable housing properties- 87% LTC and 1.15 DSCR
  • Rental assistance properties- 90% LTC and 1.11 DSCR

Loan Term and Interest Rate

  • Up to 3 years of interest only construction funds
  • Followed by up to 40 years of fully amortizing perm debt
  • In total, loan term is up to 43 years- interest rate is fixed for the whole term

Prepayment penalty
Various different options.

Loan Assumption
Loans are assumable subject to HUD approval

Loan is non-recourse with standard “bad-boy” carveouts

Anywhere from 5-10 months (depending on geographical location and HUD’s pipeline)

Mortgage Insurance Premium
Mortgage insurance premium (MIP) for each construction year is paid at loan closing. MIP for the perm debt is paid on an annual basis. The mortgage insurance premium is 65 basis points for market-rate properties and 45 basis points for Section 8 or Low-Income Housing Tax Credit Properties. MIP of 25 basis points is available for properties that qualify for a Green MIP Reduction.

Standard Costs

  • Application fee of about $25,000 (typically covers appraisal, environmental report, market studies etc)
  • HUD exam fee- 0.3% of loan amount
  • HUD inspection fee- 0.5% of loan amount paid at closing
  • Standard financing fees, lender’s legal and title

Additional Terms and Facts

  • While smaller loans may be considered, most FHA HUD 221(d)(4) loans are at least $10 million
  • Construction budget must adhere to the Davis-Bacon prevailing wages in the property market
  • Loans must go through HUD pre-screening process and require an annual audit
  • Construction requires a bonded general contractor. General contractor must execute a GMP contract and offer a 100% performance and payment bond. Additionally, GC must have liquidity of at least 5% of the total contract cost
  • Borrower must have a qualified architect through the duration of construction
  • Both owner and general contractor must have a cost certification by the end of the construction period
  • HUD requires stabilization of the property to be achievable within 18 months of C/O.



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