Loan Programs

Affordable Housing

Construction or Rehabilitation

The HUD 221(d)(4) program provides 40 year fixed rate, non-recourse, fully amortizing construction and permanent financing for affordable housing properties, or substantial rehabilitation for existing affordable housing properties nationwide. Bedford Lending specializes in helping borrowers who have little to no familiarity with HUD financing secure the capital needed for their projects.

HUD defines Affordable Housing as projects that meet the following requirements:

  1. Rent and income restrictions must be imposed, monitored and enforced by a governmental agency for at least 15 years after construction, and
  2. Either
    1. a recorded Regulatory Agreement requiring the project to meet at least the minimum LIHTC restrictions of 20% of units at 50% of area median income (AMI), or 40% of units at 60% of AMI, with economic rents (i.e. the portion paid by the residents) on those units no greater than LIHTC rents, or
    2. a Project-Based Section 8 contract for 90% of the units.

Projects do not need to use LIHTCs to qualify for affordable underwriting so long as they meet the above rent restrictions.

Affordable projects qualify for 87-90% LTC construction financing. Unlike bank financing where a permanent loan is secured after the construction loan, with HUD the construction to permanent is all in one, and the interest rate is locked in prior to construction, which mitigates interest rate risk in a rising rate environment. Construction interest payments are also capitalized in the mortgage amount.

The first step in the process is a formal discussion with HUD - called a "Concept Meeting" before any third parties are secured or money is spent. This "pre-loan committee" provides comfort before moving into the formal underwriting process. Bedford Lending does not charge up-front, or pro-rated fees, we only receive our finance fee at successful closing. 

Creative Solutions

Bedford Lending is a nationwide leader in providing finance solutions for affordable housing projects throughout the United States. No project is too big, small, or complex. We frequently finance loans that other lenders or institutions have difficulty completing. We have successfully worked on projects funded by, including, or requesting:

  • Section 202 Loans
  • Section 236 Loans (inc IRP Decoupling)
  • RAD Conversions
  • 9% & 4% Low Income Housing Tax Credits ( LIHTC )
  • Tax Exempt Bond Financing
  • Flex Subsidies
  • HAP Contracts

Often times, we meld subordinated loans or grants with our direct loan programs to fill critical equity gaps. Our direct HUD programs can be used to fund capital improvements, replenish replacement reserves and to add supportive services. In addition, we have extensive experience securing rent increases and helping with regulatory issues free of charge.