Top 10 HUD Lenders of 2021
We take a closer look at the institutions with the highest origination volumes under HUD’s MAP program for the department’s 2021 fiscal year.
Although 2021 presented a unique set of challenges — both for borrowers and lenders alike — HUD-backed financing continued to flow. Below, you can find our ranking of HUD lenders for 2021.
Data provided by the Department of Housing and Urban Development shows that originations through its Multifamily Accelerated Processing, or MAP, platform significantly picked up last year, with initial endorsements of $29.5 billion, or a 55% jump compared to the 2020 figure. However, it should be noted not all lenders increased activity — but the vast majority of the companies on our list registered double-digit increases, with one financial institution skyrocketing to more than double its previous year’s volume.
2021 MAP Volume*
Walker & Dunlop
Orix Real Estate Capital
Mason Joseph Co.
* The figures used in the table adhere to HUD’s 2021 fiscal year, which spans the 12-month period ending in September 2021.
Chicago-based global brokerage and real estate services firm Jones Lang LaSalle lands in 10th place on our list, with $886.3 million in HUD financing issued in the year ending in September 2021. The lender’s largest HUD origination of the year involved a $104.7 million Section 220 FHA loan for The Couture, a 44-story development a stone’s throw from Lake Michigan in downtown Milwaukee, Wis., as reported by BizTimes Milwaukee.
9. Gershman Mortgage
Founded in St. Louis in 1955, Gershman Mortgage finances a diverse range of assets, from single-family homes to large multifamily communities and health care facilities. The firm provided $905.2 million in HUD-backed financing in 2021, a slight drop from the $909.8 million reported in the previous fiscal year. The company’s largest origination was a $75 million FHA 223(f) refinancing of the 1,028-unit Lake Shore Apartments in Ypsilanti, Mich.
8. Mason Joseph Co.
Mason Joseph Co. provided $913.7 million in HUD loans in 2021, an incredible 54.7% increase over the lender’s volume the previous year. The firm has offices in San Antonio, Oklahoma City, and Fort Worth, Texas, and finances a wide selection of multifamily and senior housing properties across the country.
7. ORIX Real Estate Capital
Japanese investment-banking giant ORIX’s U.S. subsidiary, ORIX Real Estate Corp., generated nearly $1.3 billion in HUD debt in the 2021 fiscal year, more than double the $623.1 million reported the year before. Forest Properties’ 312-unit Ranch Lake Apartments in Bradenton, Fla., nabbed the lender’s biggest loan of the year, netting $51 million to pay down a previous Fannie Mae® loan, county records indicate.
6. Merchants Capital
Established in 1990 to finance multifamily and health care assets, Merchants Capital hit a new high this past year, with HUD originations of nearly $1.7 billion — an 88% increase from 2020. In addition to FHA loans, the lender works extensively with a broad range of financing options, including Freddie® Mac® and Fannie® Mae® packages and USDA-backed multifamily loans.
5. Rockport Mortgage
Rockport Mortgage comes in fifth place on our list, with $2.1 billion in FHA originations in 2021. The company began operations in 1992 and has focused on FHA lending from the get-go. Since 2010, the firm has originated close to $6 billion in FHA debt encompassing 51,000 multifamily units in 38 states. Rockport’s largest mortgage last year was the $120.4 million 220(f) refinance of Summit Plaza, a 483-unit Section 8 asset in Jersey City, N.J.
4. Walker & Dunlop
Walker & Dunlop’s position near the top of our list should hardly come as a surprise: The lender had an overall loan servicing portfolio of around $107.2 billion at the end of 2020. In 2021, the organization provided $2.3 billion in loans through HUD’s accelerated MAP platform, an increase of nearly 50% over the year. Founded in 1937 and led by Willy Walker since 2007, the firm clocked upwards of $1 billion in revenue in 2020.
Founded in 2009 as a joint venture between Berkshire Hathaway and Leucadia National Corp., Berkadia provides financing solutions for a broad range of asset classes, from affordable multifamily housing to hospitality properties. The New York-based firm had a HUD origination volume just above $2.6 billion in 2021, a 43% uptick compared to the year before.
2. Dwight Capital
With a commercial real estate loan servicing portfolio of more than $9 billion, Dwight Capital is one of the largest providers of commercial mortgages in the country. Last year, the firm boosted HUD originations by 40%, ending the year with $3.1 billion in total volume. In one of its largest deals, Dwight Capital closed a $128 million refinancing package for the 400-unit, mixed-use City Market at O Street in Washington, D.C.
Our top HUD lender of 2021 is Greystone, which registered 160 FHA loans clocking upwards of $3.3 billion through the MAP program. This marks an increase of about 50% compared to 2020. In addition to its MAP origination volume, Greystone provided an additional $1 billion in LEAN financing for 83 health care assets across the country. The company also is heavily involved in financing a number of other asset types, including self storage, office and industrial properties.
What are the best HUD lenders for 2021?
The best HUD lenders for 2021 are:
- Berkadia - Founded in 2009 as a joint venture between Berkshire Hathaway and Leucadia National Corp., Berkadia provides financing solutions for a broad range of asset classes, from affordable multifamily housing to hospitality properties. The New York-based firm had a HUD origination volume just above $2.6 billion in 2021, a 43% uptick compared to the year before. Source
- Merchants Capital - Established in 1990 to finance multifamily and health care assets, Merchants Capital hit a new high this past year, with HUD originations of nearly $1.7 billion — an 88% increase from 2020. In addition to FHA loans, the lender works extensively with a broad range of financing options, including Freddie® Mac® and Fannie® Mae® packages and USDA-backed multifamily loans. Source
What are the benefits of using a HUD lender?
HUD loans offer a number of benefits, including extremely high leverage, fixed interest rates, and the ability to lock in the interest rate early on in the application process. HUD loans across the board are well known for allowing some of the highest loan-to-value ratios in the multifamily industry, with an LTC ratio of up to 85% for market-rate properties and up to 87% for properties with an affordable housing component. For subsidized housing developments, a HUD 221(d)(4) loan can have a maximum loan-to-cost ratio of up to 90%. For all HUD loans endorsed between January and September 2022, the fixed interest rates averaged 3.35%, according to data provided by the department.
For more information, please visit Top 5 Advantages of HUD Construction Financing.
What are the requirements for obtaining a HUD loan?
HUD's multifamily loan programs are designed to help borrowers of all experience levels access the financing they need to succeed in the multifamily housing market. The minimum credit score for most programs is just 620, and there are options for borrowers with even lower scores.
In addition, each property must be covered by property and liability insurance for the duration of the loan. The first year’s premiums must be paid in full at closing. In addition, borrowers must provide their lenders with evidence of insurance on or before the closing date or before the policy’s renewal date.
What types of HUD loans are available?
HUD multifamily loans are some of the most competitive types of financing out there. There are many different kinds of HUD multifamily financing, with several described below.
The HUD 223(f) loan is arguably the pièce de résistance of multifamily purchase loans. HUD definitely prefers more experienced borrowers, but they offer LTVs up to 85% and DSCRs as low as 1.18x for market-rate properties, with higher LTVs and lower DSCRs for affordable properties.
HUD also offers its 221(d)(4) program for apartment construction and substantial rehabilitation, but they can be significantly more risky (in general, these types of projects may not always be ideal for first-time apartment investors). All HUD Apartment loans are non-recourse, fixed-rate, and fully amortizing over 35+ years, making them a fantastic option for longer-term buy and hold investors.
How do I compare HUD lenders?
Comparing HUD lenders can be a tricky process. It's important to consider the lender's experience, loan terms, and customer service. You can start by researching lenders online and reading reviews from other borrowers. You can also ask for referrals from other real estate professionals or contact the HUD office in your area for more information.
When comparing lenders, make sure to look at the loan terms they offer. HUD loans are typically fully amortizing, fixed-rate loans with terms of 35 years or more. Look for lenders that offer competitive interest rates and low fees. You should also consider the lender's customer service and how quickly they can process your loan.
Finally, make sure to compare the overall cost of the loan. This includes the interest rate, fees, and other costs associated with the loan. By comparing the total cost of the loan, you can make sure you're getting the best deal possible.
What are the advantages of using a HUD loan?
HUD loans across the board are well known for allowing some of the highest loan-to-value ratios in the multifamily industry. This is especially true for HUD 221(d)(4) financing, which typically allows for a loan-to-cost ratio of up to 85% — far higher than any Fannie or Freddie loan or other conventional financing product.
And that’s just for market-rate properties. If you are planning to develop a property with an affordable housing component, an LTC ratio of up to 87% is possible. Granted, this will require a regulatory agreement to be in place for a specified period of time — say, a commitment to reserve 20% of units for households earning a maximum of 50% of area median income — but this requirement may not be much higher than local affordable housing requirements for new developments.
Finally, if the property is a subsidized housing development, meaning 90% of the units are covered by a project-based Section 8 contract or covered by Low-Income Housing Tax Credits restrictions, a HUD 221(d)(4) loan can have a maximum loan-to-cost ratio of up to 90%.
While many loan products include fixed interest rates, HUD loans’ interest rates trend lower than nearly any other kind of financing. For all HUD loans endorsed between January and September 2022, the fixed interest rates averaged 3.35%, according to data provided by the department. Of course, as interest rates have risen across the board, so too have HUD rates — but they remain among the lowest available.
Best of all, borrowers are able to elect to lock the interest rate early on in the application process. While it requires a deposit equal to 1% of the loan’s amount — which is refunded at closing — this can be a great way to ensure advantageous debt costs, particularly when rates are expected to rise more.