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HUD 223(f)
The Only Way to Refinance or Purchase Apartment Buildings

Spurred by the 2008 Credit Crunch, HUD's FHA® 223(f) multifamily loan insurance program has become more popular in recent years. Even with all the popularity it gained, it's still grossly misunderstood and even unknown to many in the industry. Despite its lack of widespread recognition, the HUD 223(f) program offers financing with longer terms and longer amortization at a lower interest rate than Fannie Mae®, Freddie Mac®, CMBS loans, and even life company multifamily loans.

In the past, FHA 223(f) loans gained a reputation as being solely for nonprofits, low-income housing, and affordable housing projects. Because of this, many market-rate multifamily owners/operators have, and continue to, miss out on the industry's most affordable (and highest-leverage) financing mechanism.

HUD 223(f)-insured loans carry the stigma, and rightfully so, of taking longer to originate. That's true, as average origination times remain around four months from application to closing. However, if you're not in a great hurry, that's only 60 days longer than the average amount of time it takes to close a Freddie Mac multifamily loan or even a Fannie Mae DUS multifamily loan.

Keep reading below to learn more, or click here to download our easy-to-understand HUD 223(f) loan term sheet.

Call (877) 585-8645 Today for a Free FHA/HUD 223(f) Multifamily Loan Quote

Overview of Terms, Qualifications, and Valuable Facts

Facts To Consider

HUD provides a full checklist of requirements for 223(f) loans. However, much of the checklist and process is managed in-house. You can see the full HUD 223(f) checklist here. We've also provided a fairly complete synopsis of the FHA 223(f)-insured loan program below. You can find the basics to submit a file for consideration on the Apply Page of our site. 

  • 35 years fixed and fully amortizing loan terms

  • Interest rates are very competitive, but borrowers must pay MIP

  • To be eligible, the property must be at least three years old, or, if it was substantially rehabilitated, the rehabilitation must have been completed at least three years ago. Standard repairs are allowed.

  • Monthly funding of replacement reserves is required with initial funding of replacement reserves — sometimes as much as $1,000 per unit for older properties.

  • An annual audit of operations is required.

  • The minimum loan amount is $2 million, with exceptions made on a case-by-case basis.


The purchase or refinancing of detached, semi-detached, row, walkup, and elevator-type multifamily properties, including market-rate, low-to-moderate income, and subsidized multifamily, cooperative housing and affordable housing properties with at least five units. 

Commercial Space Limitation

Commercial and retail space is limited to the lesser of 20% of the net rentable area or 20% of the effective gross income. 


Single-asset, bankruptcy-remote, for-profit or nonprofit entities.


The loan amount will be maximum proceeds subject to the lesser of:

  • 83.3% LTV or the amount of debt that can be serviced by 83.3% of net operating income for market-rate properties

  • 85% LTV or the amount of debt that can be serviced by 87% of net operating income for affordable housing properties

  • 87% LTV or the amount of debt that can be serviced by 90% of net operating income or more for rental assistance properties

  • For refinancing: the greater of 80% LTV or 100% of the total cost of refinancing the existing indebtedness and other mortgageable transaction costs

  • For purchases: 100% of mortgageable transaction costs, excluding the portion of grants, public loans, and tax credits applied

  • Statutory per-unit limits applied


Properties must have an average actual occupancy of at least 85% for the six months prior to application. This level of occupancy must be maintained throughout the process until funding. The maximum underwritten occupancy for market-rate properties is 93%; for affordable properties and rental assistance properties, it's 95%. 


  • The replacement reserves required in accordance with HUD guidelines (minimum of $250 per unit per year) will be established by a PCNA report. An initial deposit will be required at closing, which can be funded by the mortgage proceeds.

  • Taxes and insurance are escrowed monthly.

Repairs and Improvements

Repairs, deferred maintenance, and capital improvements for up to the greater of 15% of the property value, $6,500 per unit (adjusted for high-cost areas), or 20% of the mortgage proceeds can be included in the loan amount, subject to leverage and DSCR limitations. 


The mortgage insurance premium is paid annually. At origination, 1% of the loan amount is due to HUD at closing from loan proceeds as the first-year MIP. It's 0.60% annually thereafter, with an adjustment to 0.45% for affordable properties.


Fixed and fully amortizing for up to 35 years; not to exceed 75% of the remaining economic life of the property. 


Interest rates are fixed throughout the life of the loan and determined by prevailing market conditions. While 223(f) interest rates are often lower than bank and agency loans, they do require borrowers to pay MIP. 


All loans are non-recourse to key principals, subject to standard carve-outs.


All loans are fully assumable subject to FHA approval and a fee of 0.05% of the original FHA loan amount. 


Generally, for best pricing, it's 10 years of call protection structured as a two-year lockout, followed by a step down from 8%. There's no prepayment penalty if the loan is assumed. 


  • Application fee: generally $25,000 to cover third-party reports and due diligence, including:

    • Appraisal

    • Phase 1 environmental

    • PCNA

    • Market study

  • FHA application fee: 0.30% of the loan amount

  • FHA inspection fee:

    • $30 per unit where the repairs are more than $100,000 in total but $3,000 or less per unit

    • The greater of $30 per unit or 1% of the cost of repairs if the repairs required are greater than $3,000 per unit

  • Finance and permanent placement fees: typically capped at 3.50% of the loan amount, paid from mortgage proceeds

  • Good-faith deposit (rate lock and commitment): 1% of the loan amount, paid at the time of commitment and refunded at closing

  • Lender's legal, title, and other standard borrower closing costs


FHA 223(f)-insured loans generally take 100–150 days to close, subject to deal specifics.


  • Loans over $50 million may be subject to more conservative leverage and DSRC constraints.

  • FHA 223(f) can be used in conjunction with LIHTC.

  • FHA 223(f) can be used to refinance or acquire properties that involve Section 202, Section 236, and Section 8 funding.

  • A Project Capital Needs Assessment (PCNA) will be required every 10 years.

  • Davis-Bacon requirements do not apply to repairs.

Get Qualified!

To apply for a 223(f)-insured loan, please go to our Apply Page and follow the instructions. Or send an email with your contact information and info about your project to today. 

If a HUD 223(f) loan isn't right for your multifamily development or substantial rehabilitation project, please visit for more options that include bank financing, life company financing, Fannie Mae, Freddie Mac, and more. You may also email directly at

Call Now: (877) 585-8645

Speak with a HUD-Insured Multifamily & Health Care Finance Specialist