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Multifamily Construction or Substantial Rehab Loans

FHA/HUD Section 221 (D)(4)

  • 2.75% to 4.5% Fixed
  • Eligible properties: Market rate, low to moderate income and subsidized multifamily properties 
  • Commercial space limited to 25% of net rentable area & 15% of gross income (30% underwritten EGI in urban renewal areas under Section 220)
  • Term & amortization: 2 year + 2 months interest only construction loan then 40 years fully amortizing
  • $3 to 100 Million+
  • Nationwide
  • No upfront fees. We are paid when your loan is funded at closing.
  • High LTC: Subsidized: 90% LTC with 1.11X debt service coverage; Affordable: 87% LTC with 1.15X debt service coverage; Market Rate: 85% LTC with 1.18X debt service coverage; Subsidized and Affordable: 80% LTC with 1.25 debt service coverage 
  • Minimimum Scope of Work:
  • 0.5% rate lock deposit refunded at closing
  • Non-recourse
  • Low fees and points
  • Prepayment and assumption negotiable
  • 700+ Credit
  • Strong borrower/sponsor liquidity, net worth, financials and experience required
  • Single asset, special purpose entity, either for profit or non-profit required
  • Eligible properties must: provide continuous protective oversight, offer 3 meals per day, state licensed, non-resident care not to exceed 20% of gross area & gross income, may include up to 25% non-licensed independent living units and commercial space up to 10% of gross floor area & income
  • Construction or rehab defined as 15% of post-rehabilitated value or replacement of 2+ major building components
  • Davis Bacon wages required by HUD and determined by Department of Labor
  • Escrows: (1) prior to construction, reserves for interest, taxes, insurance, working capital (4% of loan) and initial operating deficit; balances released to borrower 6 months after 6 consecutive months of break-even operations; (2) Post construction: taxes, insurance and mortgage insurance premium escrowed monthly and a capital needs reserve maintained with monthly deposits in accordance with HUD guidelines
  • Mortgage insurance premium: 0.77% payable at closing and annually until principal repaid (0.45% for tax credit deals)
  • HUD application fee: 0.30% of estimated loan amount due with submission of final application
  • Third party reports: appraisal, market study, environmental & review of final construction and architectural docs by HUD approved reviewer
  • Timeline: typically 12 months from due dilligence to closing
  • Please click blue Construction and Rehab of Healthcare Property Link for FREE PRE APPROVAL LOI within 24 business hours. With a few clicks of your mouse it TAKES LESS THAN 3 MINUTES TO GET STARTED NOW. No credit cards, Social Security Numbers or credit checks required
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