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Purpose Provides mortgage insurance for proposed apartment projects and rehabilitations including elderly projects.
 
Eligible Borrowers Profit motivated, or non-profit single purpose entities.
Territory Nationwide
 
Maximum Term 40 years plus a construction period.
 
Maximum Loan the lesser of:
  1. 90% of replacement cost, or
  2. Amount of debt that can be serviced by 90% of net income.
  3. HUD statutory limit
 
Personal Liability None
 
Prepayment Negotiable. Typically closed for the construction period and the first two years after construction, then open to prepayment at 8% in year three, declining 1% per year thereafter. Prepayment structures can vary based on the needs of a client.
 
FHA Application Process An application fee of 0.3% of the requested mortgage amount is payable to HUD at the time of application.
 
Builder/Developer's Profit Builder and sponsor’s profit and risk allowance equal to 10% of all costs other than land.
 
FHA Inspection Process
  1. 0.5% of loan amount (new construction)
  2. 0.5% of costs associated with construction (sub rehab)
 
Mortgage Insurance Premium 0.45% at closing for each year of the construction period, then .45% annually.
 
Funding Qualifies for government insured mortgage-backed securities (GNMA) or direct placement or may be used to credit-enhance tax-exempt bonds.
 
Interest Rate Subject to market conditions.
 
Amortization 40 years
 
Financing Fee Negotiable
 
HUD Processing Timeframe 60-90 days