Multifamily Housing

223(f) Acquisition / Refinance

Our direct HUD 223(f) program provides high-leverage, non-recourse financing for the acquisition or refinance of multifamily properties nationwide. 

Program terms include:

• 35 year fixed rate
• Fully amortizing
• Non-recourse 
• 87-90% LTV (80% LTV for cash-out refinances)
• 1.11-1.15x DCR
• No affordable units required, can be 100% market rate or blended
• Can be combined with Historic Tax Credits, LIHTC, Grants, etc.

All HUD loans are assumable, and the interest rate can be modified (subject to factoring in a declining prepayment penalty over the first 10 years, as applicable) making HUD an excellent option for long term investment scenarios or shorter term holds.

Market rate properties qualify for 87% LTV financing (80% LTV for cash-out refinances), which increases to 90% for projects that meet HUD's definitions of affordability (please see the right side of this page for a document that provides more information on these definitions). 

Capital improvements can be completed as part of the loan (up to ~$50,000 per unit), and reserve deposits are a mortgageable cost. Unlike HUD's 221(d)(4) construction or rehabilitation program, repairs and improvements completed under the 223(f) program do not require Davis Bacon wage rates, and typically require limited architectural and engineering work. 

The program can also be used to refinance recently constructed apartment projects as soon as the property is cash flowing and achieves 85%+ occupancy. The source of construction funding in these scenarios is irrelevant, HUD will pay off a conventional lender, private capital, etc.

The 223(f) program takes about 5-6 months to close. 

Please note, while the 223(f) program can be used for both acquisitions and refinances, acquisition scenarios may be challenging due to timing (many sellers do not want to wait 4-6 months to close), and if you acquire a property with HUD, improve the bottom line, and then refinance with HUD at a later date to recapitalize yourself, you will be subject to the initial HUD acquisition loan's prepayment penalty (10-9-8-7-6-5-4-3-2-1 over the first 10 years) at time of refinance.