FHA/HUD 223(d)4 Construction and Substantial Rehabilitation Financing for MultiFamily Properties

Eligible Properties:    Market rate, low-to-moderate income and subsidized multifamily properties

Commercial Space:   Limited to 25% of net rentable area and 15% of underwritten effective gross income (up to 30% of underwritten EGI                                                  permitted in urban renewal areas under Section 220).

Minimum Scope        All construction of new buildings plus renovation of existing buildings that meet one of the following conditions.
of Work:                      a) Renovation costs total more than $15,000 per unit times a local cost factor (typically 190%-270%)
                                     b) Renovation will replace more than 50% of two or more building systems: electrical, plumbing, mechanical, building                                                     envelope, structural. 

David Bacon               Payment of prevailing wages, as determined by the Department of Labor, is required for all
Wages :                         contractors and subcontractors.


Borrower:                   Single asset, special purpose entity, either for profit or non-profit

Recourse:                   Non-recourse

Interest Rate:             Single fixed rate for both the construction I-O period and the permanent loan term, determined by market conditions at                                            time of rate lock. Rate lock deposit is 0.5% and refunded at closing.     

Loan Parameters:     Property Type                   Maximum Loan-to-Eligible Cost                   Minimum DSC         
                                     Subsidized1                                             90%                                                     1.11x                          
                                     Affordable2                                              87%                                                    1.15x                   
                                     Market Rate                                             85%                                                     1.17x                           
                                     
                                    1 At least 90% of the units covered by a project-based Section 8 contract.
                                    2 Regulatory Agreement with a minimum set-aside (e.g.,40% of units at 60% AMI, or 20% of units at 50% AMI) in effect
                                       for at least 15 years after the new loan closes.
                                    3 Eligible cost includes hard costs and most soft costs plus the as-is value of project or land. Examples of ineligible
                                       costs include refundable reserves, preliminary marketing costs, and offsite improvements.

                                    In addition, loan cannot exceed the programmatic per-unit maximum as adjusted by HUD for
                                    project location (local cost factor). 

Term and                   Interest-only term equal to actual construction period plus 2 months for cost certification followed by 40 years fully               Amortization:            amortizing.               
                  
Prepayment              Negotiable with best pricing for 10 years of call protection (can be a combination of lockout and/or penalty); loan is fully       and Assumption:      assumable subject to HUD approval.   
                                         


To begin our application process,  submit a preliminary application , or contact Kevin Jamison at (855) 577-2500 x702 to learn more.