High Leverage, Low-Cost, Long-Term Apartment Financing Insured by HUD 

When it comes to multifamily financing, HUD/FHA multifamily loans offer some of the most generous terms in the entire industry. For example, HUD’s flagship HUD 221(d)(4) loan program offers fixed-rate, non-recourse terms of up to 40 years for new construction, and up to 35-year terms for substantial rehabilitation, plus a 3-year construction-loan period. 

Despite the benefits of HUD multifamily loans, these loans can be difficult to be approved for. HUD looks for excellent sponsorship, apartment management experience, and also wants borrowers to have great credit scores and a clean legal history. 

Similar to Fannie Mae and Freddie Mac’s multifamily financing programs, HUD apartment loans are government-backed, but in a slightly different way. Fannie and Freddie directly buy loans, package them into bonds, and sell them on the secondary market. In contrast, HUD provides loan insurance for lenders, so that the government reimburses the lender if the borrower defaults on their loans. 

HUD/FHA multifamily financing also has a variety of other niche benefits. For one, HUD loans are assumable, meaning that a new owner can take on or “assume” the loan from the previous owner, provided they meet HUD’s loan qualification guidelines. 

HUD also has specific programs for seniors housing, student housing, and affordable housing, with specific benefits for affordable and low-income housing tax credit (LIHTC projects).


HUD 221(d)(4) Multifamily Construction Loans

  • Loan Purpose: Building or substantially rehabilitating multifamily properties.

  • Size:

    • $4 million to $100 million+

    • Loans as little as $1 million- $2 million may be extended in certain circumstances

    • Most loans are $5 to $15 million+

  • Terms: Up to 40 years for new construction or substantial rehabilitation, with an up to 3-year interest-only (IO) construction period.

  • Maximum LTV:

    • 85% LTV for market rate

    • 87% LTV for affordable properties

    • 90% LTV for LIHTC properties

  • DSCR:

    • 1.20x for market rate

    • 1.15x for affordable properties

    • 1.11x for LIHTC properties

  • Term: Up to 30 years

  • Amortization: Most loans are fully amortizing

  • Interest Rates: Fixed-rate


HUD 223(f) Loans for Acquisitions and Refinancing

  • Loan Purpose: Purchasing or refinancing stabilized multifamily properties.

  • Size:

    • $1 million to $100 million+

  • Terms: Up to 35 years or 75% of the project’s remaining economic life. Minimum 10-years.

  • Maximum LTV:

    • 85% LTV for market-rate

    • 87% LTV for affordable properties

    • 90% LTV for LIHTC properties

  • DSCR:

    • 1.18x for market rate

    • 1.15x for affordable properties

    • 1.11x for LIHTC properties

  • Amortization: Fully amortizing

  • Interest Rates: Fixed-rate


HUD 232 Loans for Building Senior Living Properties

  • Loan Purpose: Construction or substantial rehabilitation of senior living properties, including assisted living centers, nursing homes, memory care facilities, and intermediate care facilities.

  • Loan Size: $2 million to $100 million+ (average loan is $7.6 million)

  • Terms: Up to 35 years or 75% of the project’s remaining economic life. Minimum 10-years.

  • Maximum LTV:

    • New Construction: For-profits: 75% LTV, Non-profits: 80%

    • Purchase: For-profits: 80% LTV, Non-profits: 85% LTV

    • Substantial Rehabilitation: For-profits: 80% LTV, Non-profits: 85% LTV

      • Calculated as the lesser of max. LTV or 90% of HUD eligible replacement costs

      • 100% of the existing mortgage debt for borrower owned properties, or 90% of the “as is” market value of the property before rehab, whichever is less (95% for non-profits)

      • For purchase and substantial rehab, LTV is capped at 85% of the property’s purchase price or 90% of the market value of the asset before rehab (95% for non-profits)

      • These limitations also apply to independent living communities and skilled nursing facilities

      • DSCR: 1.45x min. DSCR

      • Amortization: Fully amortizing

      • Interest Rates: Fixed-rate


HUD 232/223(f) Loans for Senior Living Acquisitions or Refinancing

  • Loan Purpose: Purchasing or refinancing of senior living properties, including assisted living centers, nursing homes, memory care facilities, and intermediate care facilities.

  • Loan Size: $2 million minimum (average loan size is $7.6 million)

  • Loan Term: Up to 35 years or 75% of the project’s remaining economic life. Minimum 10-years.

  • Leverage:

    • Purchase:

      • For-profits: 85% of the purchase price or market value, whichever is less.

      • Non-profits: 90% of the purchase price or market value, whichever is less.

    • Refinance::

      • For-profits: 100% of refinancing cost or 85% of market value, whichever is less.

      • Non-profits: 100% of refinancing cost or 90% of market value, whichever is less.

  • DSCR: 1.45x min. DSCR


HUD 223(a)(7) Loans for Refinancing HUD Multifamily Debt

  • Loan Purpose:

    • Refinancing current HUD multifamily loans, including HUD 221(d)(4) and HUD 223(f) loans. Specialized HUD 232/223(a)(7) option for refinancing HUD 232 and HUD 232/223(f) senior living loans.

    • Filling up replacement reserves.

    • Conducting minor, necessary repairs.

  • Loan Size: No more than 100% of refinancing expenses, including the balance of the existing loan, replacement reserve account replenishment, loan fees, third-party reports, necessary repairs. Cash-out refinancing is not permitted.

  • Loan Term: Up to 35 years or 75% of the project’s remaining economic life. Minimum 10-years.

  • DSCR:

    • For-profits: 1.11x min. DSCR

    • Non-profits: 1.05x min DSCR


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