Multifamily Housing

221(d)(4) Construction / Rehab

Our direct HUD 221(d)(4) program provides 40 year fixed rate, non-recourse, assumable debt financing for the ground up construction or rehabilitation of multifamily projects nationwide. For existing properties that need rehabilitation, the 221(d)(4) program is typically used when repairs exceed ~$40,000 per unit. If repairs are below this threshold, the HUD 223(f) program may be used as long as the asset is above 85% occupancy.

Eligible properties can secure:

• 40 year fixed rate
• Fully amortizing
• Non-recourse financing.
• Minimum 87-90% LTC 
• 1.11x - 1.176x DCR Requirement
• Declining prepayment

All HUD loans are also assumable, making HUD an excellent option for long term investment scenarios or short term holds. Unlike bank financing where a permanent loan is secured after the construction loan, with HUD the construction and permanent process is completed as one, and the interest rate for the permanent term is locked prior to construction. Construction interest payments are also capitalized in the mortgage amount. 

Typically, the 221(d)(4) program takes about 6-12 months to complete, and is available nationwide. There are no affordable restrictions or rent ceilings imposed by HUD; properties can be 100% market rate in any configuration (townhomes, garden style, etc). Under the program, borrowers can utilize a variety of credits to potentially increase the leverage to 100%+ for market rate properties, and tax credits or other public grant sources can be combined with HUD to provide 100%+ financing including a developer's fee.

As an added protection, the first step in the process after our extensive due diligence is a formal discussion with HUD called a "Concept Meeting". We discuss the project directly with you and HUD before any monies is spent on third party reports, etc. Bedford Lending does not charge up-front fees; we only receive our finance fee as part of a successful closing.