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BK-0910597

FHA Multifamily Section 221 (d)(3 or 4)

Under section 221 (d)(3) and 221 (d) (4) of the National Housing Act, the Federal Housing Administration (FHA) provides mortgage insurance to facilitate the new construction and substantial rehabilitation of multifamily rental properties.  Section 221 (d)(3) is used by non-profit and cooperative sponsors; 221(d)(4) is used by profit motivated sponsors.

Product Overview:

 (For a Printable PDF of this program, please click here)

Eligibility 

  • To be built or substantial rehabilitation properties that are being refinanced or acquired
  • Multifamily rental housing including seniors apartments

Loan Amounts                                                                                        No maximum

Term/Amortization                                                                                up to a 40 year permanent loan plus construction period

Interest Rate                                                                                        Low fixed rate established by market spread over the 10 year treasury

Debt service coverage ratio                                                                1.11x minimum

Loan Limitations                                                                                     New Construction                                                                                    -90% of total development cost (including land); or                                    -Amount that can be supported by 90% of the estimated net operating income at the loan constant; or                                                                 -Statutory per unit limitation plus 90% of the cost of site and improvements not attributable to dwelling use                                          Substantial Rehabilitation                                                                        -90% of the cost of rehabilitation plus 90% of the market value of the land and improvements prior to rehabilitation; or                                            -Amount that can be supported by 90% of the estimated net operating income at the loan constant; or                                                                -Statutory per unit limitation plus 90% of the cost of site and improvements not attributable to dwelling use

Personal recourse                                                                                Non-recourse for construction period with standard "Carve-Outs" to the sponsor

Prepayment                                                                                           Negotiable, depending on market conditions.  No yield maintenance

Financing Fee                                                                                       Negotiable and competitive

Third Party Fees                                                                                    Includes legal, appraisal, engineering, and environmental reports.  Seismic reports and survey may also be required

Permanent Loan Fee                                                                            Negotiable and competitive

Assumability                                                                                        Assumable with FHA approval and a 1% fee

Venture Placement Fee                                                                        1% to 2% dependent on property