Commercial Real Estate Division

Commercial Real Estate - HUD FHA 223(f)

HUD FHA 223(f) Multifamily Loan Program Guidelines:

Eligible Properties:

  • 5+ residential unit properties, including, detached, semidetached, row, walk-up, or elevator-type rental or cooperative housing.

  • Properties must have complete kitchens and baths and have been completed or substantially rehabilitated for at least 3 years prior to the date of the application for mortgage insurance.

  • The program is available for market rate rental housing or for properties accepting rental assistance, either tenant based or project based.

  • Commercial area is permissible, but cannot exceed 20% of the net rental area, or 25% of the gross revenues.

  • Student housing properties that offer rents per room, not per unit, are ineligible.

  • 30 day minimum lease term required.

  • The property must meet a minimum three-year stabilization requirement (property must have been built and stabilized for three or more years before receiving a HUD insured mortgage). Properties with a project based affordability component (HAP Contract or other regulatory agreement) may apply for a waiver.

  • The loan may include repair costs not to exceed 15% of its value after repairs or no more than $6,500 per unit (except in high cost areas) - whichever is greatest. Repairs may not include replacing more than one major building system such as plumbing or electric.

Loan Term:

  • The lesser of 35 years or a maximum term not to exceed 75% of remaining economic useful life of the property.

Eligible Locations:

  • All 50 states, Puerto Rico, U.S. Virgin Islands, and Guam. No market - economic or population restrictions.

Loan Size:

  • $1,000,000 with no maximum.

Maximum Loan-to-Value:

  • 83.3% for market rate properties.

  • 87% for affordable properties.

Maximum CLTV:

  • 100% is possible with Joint Venture

Minimum DSCR:

  • 1.17. 1.15 for affordable properties

Minimum Occupancy:

  • Property must demonstrate a pattern of stable occupancy for 6-Months prior to application and maintained until closing.

Interest Only:

  • N/A.

Prepayment Penalty:

  • Negotiable - typically a two-year lock out followed by a step down premium (e.g. 8,7,6,5,4,3,2,1).

Guarantee:

  • Non-recourse subject to standard carve-outs.

Assumable:

  • Yes, subject to lender approval.

Rate Lock:

  • At commitment.

Escrows:

  • Tax and Insurance Impounds: Required.

  • Replacement Reserves: Required - Monthly deposit required and amount depends on property condition.

  • Initial Deposit to Reserve Fund: Required - One time deposit may be required depending on property condition.

  • Critical and Non-Critical Repair Escrow: May be required for properties with life, safety, health or code related repair and/or maintenance concerns.

Third Party Reports:

Appraisal, Market Study, Phase I Environmental, Engineering Report and Seismic where applicable.

Sponsor Requirements:

  • Experienced owner operators preferred.

  • Minimum credit and financial capacity requirements.

  • HUD experience preferred.

 

 Synergy Capital Markets

9453 De Soto Avenue

Suite M

Chatsworth, California 91311
 

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