Commercial Loan Blog

As a commercial mortgage banker making commercial loans nationally since 1997,  I have worked during every economic cycle. I can remember when rates came down from 7.40% to 6.75% in 1999 and we thought this was amazingly great. Sadly, since March of 2022, all mortgage rates have been soaring at a time when property prices are unrealistically high. We are not technically in a recession right now because it hasn’t been declared as such. This is because…

HUD/FHA Multifamily Loans are underwritten, approved, and guaranteed by the Department of Housing and Urban Development (HUD) which does not provide the financing. This is done by HUD approved lenders. Qualified property types include Apartment buildings, Senior Housing (62-year-old plus), Intermediate Care, and Assisted Living Facilities. HUD Multifamily Loans have the longest fixed rate terms of 35 to 40 years, the highest LTV’s, and lowest fixed rates.

Advantages of HUD Multifamily Loans

 Property Types:  Multifamily, Mixed-Use, Senior Housing, Healthcare…

The HUD 232/223(f) loan is for the acquisition or refinance of Senior Independent Living, Intermediate Care, Assisted Living and Licensed Nursing Home facilities. All properties are required to have 20 or more residents who require skilled nursing care and are in continual need of nurses, certified nurse assistants, and other care providers.  All properties must be licensed by the state or other governing agencies. Eligible borrowers can include for profit investors or nonprofit corporations or associations.

HUD 232/223(f) Requirements and Guidelines

For Acquisition or…

The Difference Between FHA and HUD is that FHA oversees and guarantees low down payment and low credit score loans for moderate to low-income homeowners. HUD oversees FHA, but primarily sets guidelines and guarantees multifamily loans of 5 units or more for rental property investors. The Federal Housing Administration (FHA) came first in 1934 and became a part of HUD in 1965.

FHA’s Purpose

FHA’s mandate is to make home ownership possible for first time homeowners and lower wage earners by having much lower requirements than conventional lending programs, keeping down…

Terry Painter/Mortgage Banker, Author of The Encyclopedia of Commercial Real Estate Advice – Wiley Publishers, Member of the By Terry Painter/Mortgage Forbes Business Council

HUD 221(d)(4) Loan Rates for the New Construction and Substantial Rehabilitation of Multifamily properties change daily as the 10-year treasury yield index changes. HUD adds a spread to this index based on perceived risk. If the treasury yield were to be 3.25% and the spread is 2.50 the all-in rate would be 5.75%. Interest rates are .35% lower for buildings certified green by Energystar or Leed.…

The HUD 223(f) loan is used for the acquisition, refinance, or minor rehabilitation of multifamily properties of 5 units or more. Multiple single-family homes, duplexes or triplexes are not acceptable. Multiple 4-unit buildings that are contiguous on one or individual tax lots are allowed. Mixed-Use properties can be financed if the commercial space does not occupy more than 25% of the rentable square footage or  account for more than 20% of the gross rents. 

HUD 223(f) Loan Requirements and Guidelines

Check out this link for detail on the Minimum Loan Amount for…

HUD Multifamily Loan Requirements state that you have to be a US Citizen, have good credit with no tax liens and have current multifamily ownership experience. Developers must have previous multifamily development experience. Properties can be in any size market and must have 5 units or more. Commercial space is allowed up to 25% of the rentable square footage or 20% of the gross rental income. 

HUD Multifamily…

HUD Defines Multifamily as a property that has a least 5 residential units occupied by one or more individuals. Each Unit must have a complete kitchen and a full bath. Multiple contiguous fourplexes on one or individual tax lots are considered multifamily.  Apartment Buildings, Senior Housing (62 and older): Independent Living, Intermediate Care, and Assisted Living Facilities are considered multifamily.

HUD’s Requirements for Property Condition

Buildings must be in good physical condition with all critical repairs completed within 12 months of HUD Multifamily loan…

The HUD 221(d)(4) Loan is for new construction or substantial rehabilitation of multifamily properties of 5 units or more. Multiple residential buildings of 1 – 3-units on one or individual tax lots that are not allowed. However, multiple 4-unit buildings that are contiguous are acceptable. Mixed-use properties are accepted where the commercial space is no more than 25% of the rentable square footage or 20% of the gross rental income. This is a 3-year construction loan that rolls over to a 40-year fully amortizing permanent loan. 

HUD 221(d)(4) Requirements and Guidelines…

The differences between HUD and Fannie Mae Multifamily is that HUD is a government agency, and Fannie Mae is a Government Sponsored Entity (GSE) that is in conservatorship with the US Government. Although both guarantee losses from borrower defaults, HUD’s guarantee is backed by the full faith of the US Government where Fannie Mae’s is only backed by its own corporate financial solvency. HUD can lend more money than Fannie Mae and has a longer maximum fixed rate term of 35 years compared to Fannie Mae’s maximum of 30 years. Fannie Mae has partial term interest only payments available which…

By Terry Painter/Mortgage Banker, Author of The Encyclopedia of Commercial Real Estate Advice – Wiley Publishers, Member of the By Terry Painter/Mortgage Forbes Business Council

HUD 223(f) Loan Rates for the acquisition and refinance of Multifamily properties change daily. They are tied to the 10-year treasury yield called the index, plus a spread that is determined by HUD. For example, if the treasury yield is 3.50% and the spread is 2.00%, the all-in rate is 5.50%. HUD tends to raise the spread when treasury yields rise and lower it when yields decline. Interest…