section 223(a)(7)


The purpose of the program is to provide attractive long term financing for the acquisition, moderate renovation, or refinancing of existing FHA-insured multifamily rental housing. The program provides for competitive interest rates without restriction on rental rates, cash flow or income levels of residents.


A. Personal Liability: Loans are nonrecourse to the owner and secured solely by the property.

B. Amortization: Up to 35 years (full amortizing).

C. Term: Remaining term of the existing loan plus up to 12 years. The term cannot exceed the original term of the existing loan.

D. Loan Amount: The maximum insurable mortgage is the lesser of:
1. Amount of debt service by 90% of NOI.
2. Original principal balance of the loan.
3. 100% of refinance costs.

E. Cash Out: Not allowed

F. Repairs: Repairs approved by HUD can be funded by mortgage proceeds with 10% completion assurance required from the owner in the form of cash or letter of credit.

G. Units: The property must contain five or more dwelling units with each unit providing a complete living facility.

H. Commercial Areas & Income: Commercial areas may not exceed 20% of the total net rentable area of the property nor may commercial income exceed 25% of the estimated gross project income.

I. Interest Rates: Fixed interest rate determined by market rates at the time of rate lock.

J. Assumability: Fully assumable.

K. Pre-Payment Provisions: Negotiable, but typically closed for five years then open to pre-payment at 5% of the outstanding loan balance in year 6, declining 1% per year.