HUD 221(d)(4) Multifamily construction & substantial rehab

HUD 221(d)(4) combines construction and permanent financing in one loan for new apartments or substantial rehabilitation. The permanent loan can amortize over up to 40 years after the construction period. Eligible land acquisition or an existing building can be included.

To get started, send us the proposed rents, operating budget, construction estimate and basic site information. We'll review the development team, land equity and sources and uses before moving into the full application. The program is available for market-rate apartments as well as affordable housing.

The cash requirement includes more than the down payment. Working capital and initial operating deficit escrows support construction and lease-up, and substantial rehabilitation requires a contingency reserve. Eligible land equity and BSPRA can affect the required cash contribution, but neither automatically replaces cash dollar for dollar.

Share any proposed subordinate financing, tax abatement or TIF with us during the initial review. The checklists below outline the application exhibits, and the contractor handouts explain prevailing-wage and payroll requirements.

Eligible uses & property features

• New construction and substantial rehabilitation
• Construction-to-permanent financing
• Market-rate and affordable apartments
• Long-term, fixed-rate structure

What to consider

Review contractor financials, prevailing wages, completion assurance and construction escrows early. Completion assurance may be provided through payment and performance bonds or an eligible cash or letter-of-credit alternative. Tell us about any ownership relationships among the developer, contractor and architect so we can address the applicable contract, fee and cost-certification requirements. Allow time after construction for cost certification and final endorsement; the final mortgage reflects eligible actual costs. Pricing remains subject to market conditions until the rate lock is executed.