Multifamily New Construction and Substantial Rehabilitation
New Construction or Substantial Rehabilitation of Family Apartments for Market Rate & Affordable Properties.
Eligible for up to 25% of total net rentable area and 15% (30% for Section 220) of EGI.
Qualifies as sub-rehab based on a per unit threshold for the cost of rehabilitation by meeting one of the following criteria:
a) The cost of repairs, replacements & improvements exceeds the greater of 15% of the estimated replacement cost after completion of all repairs, replacements & improvements, or $15,000 per unit adjusted by HUD’s high cost factor, or 20% of the mortgage proceeds applied to rehabilitation expense
b) Two or more major building components are being substantially replaced.
Single asset and single purpose entity, either for-profit or non-profit.
The maximum loan amount will be the lesser of:
a) 87% LTV (90% for affordable) of HUD’s estimated cost plus land/as-is value.
b) 1.15 DSCR (1.11 for affordable).
c) HUD statutory per unit limits.
d) More advantageous limits for transactions with 90% or greater rental assistance.
*Other parameters apply to mortgages over $125 million.
**Other than the above constraints, there are no minimum or maximum loan sizes.
Interest only during the construction period, plus 40 years fully amortizing.
Interest only during construction phase, amortization during permanent.
0.65% each year during construction for market rate properties (0.70% for HUD 220; 0.35% for affordable; 0.25% for broadly affordable; 0.25% for Green MIP) – Subject to change by HUD.
Non-recourse during both construction & permanent phases of financing.
Fully assumable, subject to HUD approval.
Negotiable. Best rates typically have 1-2 year lockout with declining prepayment penalty for remainder of first 10 years.
Market Study, Appraisal, Architecture and Costs Review, and Environmental Reports.
Escrows for debt service, mortgage insurance premium, taxes, insurance, replacement reserves, working capital and operating deficit are required.
Federal prevailing wage & reporting requirements.
Payment & performance bond or cash deposit/letter of credit.
$3 per $1,000 of the requested mortgage (1/2 required at Pre-Application) or $2 per $1,000 for OZ.
$5 per $1,000 of the requested mortgage for new construction; and $5 per $1,000 of improvements cost for substantial rehabilitation.
Typically 0.5% of mortgage amount, refunded at closing.
Can be combined with Credit Enhancement for Tax Exempt Bonds and Low Income Housing Tax Credits.
New Construction or Substantial Rehabilitation of Family Apartments for Market Rate & Affordable Properties.
Eligible for up to 25% of total net rentable area and 15% (30% for Section 220) of EGI.
Qualifies as sub-rehab based on a per unit threshold for the cost of rehabilitation by meeting one of the following criteria:
a) The cost of repairs, replacements & improvements exceeds the greater of 15% of the estimated replacement cost after completion of all repairs, replacements & improvements, or $15,000 per unit adjusted by HUD’s high cost factor, or 20% of the mortgage proceeds applied to rehabilitation expense
b) Two or more major building components are being substantially replaced.
Single asset and single purpose entity, either for-profit or non-profit.
The maximum loan amount will be the lesser of:
a) 87% LTV (90% for affordable) of HUD’s estimated cost plus land/as-is value.
b) 1.15 DSCR (1.11 for affordable).
c) HUD statutory per unit limits.
d) More advantageous limits for transactions with 90% or greater rental assistance.
*Other parameters apply to mortgages over $125 million.
**Other than the above constraints, there are no minimum or maximum loan sizes.
Interest only during the construction period, plus 40 years fully amortizing.
Interest only during construction phase, amortization during permanent.
0.65% each year during construction for market rate properties (0.70% for HUD 220; 0.35% for affordable; 0.25% for broadly affordable; 0.25% for Green MIP) – Subject to change by HUD.
Non-recourse during both construction & permanent phases of financing.
Fully assumable, subject to HUD approval.
Negotiable. Best rates typically have 1-2 year lockout with declining prepayment penalty for remainder of first 10 years.
Market Study, Appraisal, Architecture and Costs Review, and Environmental Reports.
Escrows for debt service, mortgage insurance premium, taxes, insurance, replacement reserves, working capital and operating deficit are required.
Federal prevailing wage & reporting requirements.
Payment & performance bond or cash deposit/letter of credit.
$3 per $1,000 of the requested mortgage (1/2 required at Pre-Application) or $2 per $1,000 for OZ.
$5 per $1,000 of the requested mortgage for new construction; and $5 per $1,000 of improvements cost for substantial rehabilitation.
Typically 0.5% of mortgage amount, refunded at closing.
Can be combined with Credit Enhancement for Tax Exempt Bonds and Low Income Housing Tax Credits.
