HUD programs

HUD 221(d)(4) Multifamily construction & substantial rehab

Build or substantially renovate an apartment community with construction-to-permanent HUD financing.

Program at a glance

Term
Up to 40 years after construction, fully amortizing.
Interest
Fixed for the loan term.
Cost limit (LTC)
Up to 87% of HUD-eligible cost; 90% for qualifying categories.
Debt coverage (DSCR)
At least 1.15×; 1.11× for qualifying categories, including MIP.
Recourse
Nonrecourse; completion obligations apply.
Annual MIP
0.25% under the current multifamily schedule.

The lowest applicable sizing result sets the loan amount. Debt coverage compares underwritten income with loan payments, including mortgage insurance.

Documents & videos

More program documents 22 files

Construction requirements

Construction & Rehab Escrows

Working capital, operating deficits, contingencies and escrow release requirements.

Davis-Bacon Contractor Checklist

A current preparation checklist for wage determinations, payroll records and labor compliance.

Ownership & closing

Financial Statements & Mortgage Credit

Borrower entities, principal review and financial statement requirements.

HUD Multifamily Regulatory Agreement (2026)

Official multifamily form for firm commitments issued on or after April 1, 2026; confirm the applicable edition with counsel.

Real Estate Tax Abatements & TIFs

Bedford’s explanation of long- and short-term abatements, PILOTs and tax increment financing. Included numbers are illustrations, not a financing quote.

Technical reference

Davis-Bacon Labor Standards Handbook (2023)

Official January 2023 handbook, retained as a dated reference. Later rules, court orders and project instructions may modify its application.

HUD Square-footage Definitions

Net rentable “paint-to-paint” and gross area definitions, with source references.

Program details & considerations

Loan sizing

Property categoryMaximum loan-to-costMinimum debt coverage
Market-rate / LIHTC without a rent advantage87%1.15×
Qualifying LIHTC with a rent advantage90%1.11×
Rental assistance on at least 90% of units90%1.11×
Qualifying middle-income housing90%1.11×

Percentages apply to HUD-recognized eligible costs, not simply the project budget. The loan is limited by the lowest applicable sizing result; large loans and other special cases may require stricter underwriting. Debt coverage compares underwritten net operating income with principal, interest and mortgage insurance; 1.15× means $1.15 of income for every $1 of debt service.

HUD sizing guidance (PDF)

The middle-income option generally requires an eligible state or local program or military Rental Partnership Program, with at least 50% of units restricted to households at or below 120% of area median income, generally for at least 10 years. HUD reviews eligibility and any exceptions.

HUD middle-income guidance (PDF)

HUD 221(d)(4) combines construction and permanent financing in one loan for new apartments or substantial rehabilitation. The permanent loan can amortize over up to 40 years after the construction period. Eligible land acquisition or an existing building can be included.

To get started, send us the proposed rents, operating budget, construction estimate and basic site information. We'll review the development team, land equity and sources and uses before moving into the full application. The program is available for market-rate apartments as well as affordable housing.

The cash requirement includes more than the down payment. Working capital and initial operating deficit escrows support construction and lease-up, and substantial rehabilitation requires a contingency reserve. Eligible land equity and BSPRA can affect the required cash contribution, but neither automatically replaces cash dollar for dollar.

Share any proposed subordinate financing, tax abatement or TIF with us during the initial review. The checklists below outline the application exhibits, and the contractor handouts explain prevailing-wage and payroll requirements.

Eligible uses & property features

  • New construction and substantial rehabilitation
  • Construction-to-permanent financing
  • Market-rate and affordable apartments
  • Long-term, fixed-rate structure

What to consider

Review contractor financials, prevailing wages, completion assurance and construction escrows early. Completion assurance may be provided through payment and performance bonds or an eligible cash or letter-of-credit alternative. Tell us about any ownership relationships among the developer, contractor and architect so we can address the applicable contract, fee and cost-certification requirements. Allow time after construction for cost certification and final endorsement; the final mortgage reflects eligible actual costs. Pricing remains subject to market conditions until the rate lock is executed.

Eligibility, proceeds, terms and timing depend on the property, underwriting and current HUD requirements. This overview is not a loan commitment.

Loan processing timeline

  1. Pre-qualification & concept meeting

    Before application

    Review rents, expenses, construction costs and the site. After engagement, we prepare a project narrative and meet with HUD to discuss the proposed financing.

  2. Pre-app preparation

    Approx. 55 days

    Order the appraisal, market study where required and environmental report. Gather preliminary plans while we assemble the pre-application package.

  3. Pre-app submission & HUD review

    Approx. 55 days

    Submit our underwriting and exhibits to HUD. Resolve comments and obtain an invitation to proceed to firm application, if approved.

  4. Firm application preparation

    Approx. 75 days

    Complete plan and cost reviews, construction pricing, borrower and contractor financial review, survey and title work. Update reports as needed.

  5. Firm submission & HUD commitment

    Approx. 55 days

    Submit the firm application and address HUD’s comments. If approved, HUD issues a firm commitment with conditions to satisfy before closing.

  6. Rate lock & initial closing

    Approx. 45 days

    Coordinate the rate lock and initial closing. Construction advances, completion, cost certification and final endorsement follow.

Timing is estimated and varies by project. Eligible projects may skip pre-application with HUD approval.

Detailed Timeline (PDF) ↗

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