FHA Section 221(d)(4) Mortgage Insurance Program

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Fixed rate construction and permanent financing for the construction of new apartment properties or for existing apartments requiring substantial rehabilitation. Available for properties throughout the United States.

ELIGIBLE PROPERTIES

Market rate, affordable, and subsidized multifamily properties.

ELIGIBLE BORROWERS

Single-asset, special purpose entities, either for-profit or non-profit.

LOCATION

Nationwide.

LOAN AMOUNT

No minimum/no maximum (subject to General Loan Parameters).

General Loan Parameters

See chart below.

INTEREST RATE

Fixed-rate, subject to market conditions at the time of rate lock.

TERM & AMORTIZATION

Interest-only term equal to actual construction period, plus 40 years fully amortizing.

LIABILITY

Non-recourse.

MORTGAGE INSURANCE PREMIUM

Depending on property type: 

.25% to .65% at Closing 

.25% to .65% Annually

ASSUMABILITY

Fully assumable, subject to HUD approval

PREPAYMENT

Typically loans are prohibited from prepayment for the 1st year, then have a 9% penalty declining 1% each year thereafter until 0%.  Alternative lockout and prepayment structures are available.

DAVIS-BACON WAGES

Payment of prevailing wages is required by HUD for all contractors and subcontractors.

OTHER

• Builders and Sponsors Profit and Risk Allowance of 10% of all construction costs can be used for sponsors with an identity of interest general contractor.
• Escrows required for repairs, mortgage insurance premium, taxes, insurance, and replacement reserves.
• Third party reports include Appraisal, Market Study, Phase I, and future Capital Needs Assessment, plus a review of the final construction and architectural documents by a HUD-approved third party contractor.
• Secondary financing is allowed, subject to HUD guidelines and approval.

Pricing: 

Contact your First American representative for a price quote.