The HUD 223(f) Loan

Loans for the Acquisition and Refinancing of Multifamily Properties insured by HUD/FHA

For investors who want to acquire or refinance multifamily properties, the HUD 223(f) Loan program is a highly effective option. Insured by the U.S. Department of Housing and Urban Development (HUD), HUD 223(f) loans begin at $1 million (though exceptions are sometimes made) and have no maximum loan amount. These loans offer some of the longest loan terms in the multifamily industry with a maximum term of 35 years, are non-recourse, fully assumable (with FHA approval), and offer fixed-rate financing at incredibly competitive interest rates with LTVs up to 85% for market-rate properties, and up to 90% for certain subsidized housing properties.

Sample Terms For HUD 223(f) Loans

  • Size:  Minimum $1 million (some exceptions allowed on an individual basis)

  • Term: Minimum term of 10 years, maximum of 35 years, or 75% of the property's remaining economic life, whichever is less                              

  • Amortization: Up to 35 years

  • Maximum LTV83.3% for market-rate properties, 85% for affordable properties, 87% for rental assistance properties                

  • Minimum DSCR:  1.17x for market-rate properties, 1.15x for affordable properties

  • Low Income Housing Tax Credits (LIHTCs): Like the HUD 221(d)(4) loan, HUD 223(f) loans allow developers to qualify for low-income housing tax credits (LIHTCs). LIHTCs function as a 4% tax credit (a 30% subsidy) or a 9% credit (a 70% subsidy), which are roughly equivalent to 4% or 9% of a project's construction costs. HUD 223(f) borrowers are typically only eligible for the 4% credit, as the 9% credit is designed for new construction or substantial rehabilitation projects.

  • Commercial Space Limitations: While HUD 223(f) loans are primarily intended to offer financing for multifamily apartment properties, the 223(f) program does allow for up to 20% of a property’s total net rentable area to consist of commercial space, or, alternately, up to 20% of a property’s effective gross income (EGI), to be derived from commercial tenants.

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