New FAQ for HUD complete guide

Answer: These loans have the longest fixed rates (35 - 40 years) with the lowest rates, highest LTVs (87%), and the longest amortizations (35 – 40 years). This means a larger loan with less down. Further more, you’re getting a non-recourse loan, which means you or your partners do not have to personally guarantee the loan.

Answer: Long term financing for properties that have 5 residential units or more. HUD Multifamily does not finance 1 – 4 Unit properties or student occupied properties. Senior housing, Independent Senior Living as well as Assisted Living facilities are fine. These loans are great for refinancing an apartment building, or for ground up construction of a new one. They also can be utilized for purchasing a multifamily property, but this is not practical because these loans can take 6 months to close.

Answer: You must be a US citizen and have good credit with no tax liens. You also are required to have multifamily ownership experience. If you are a developer doing ground up construction, you will need experience building a multifamily property of similar size and scope.

Answer: First of all, HUD/FHA does not finance these loans, they guarantee them. They are financed by HUD certified lenders who sell these loans as Gennie Mae bond traders on Wall Street to raise the funds.

Answer: Yes, for a .50% fee. They just have to qualify with the same guidelines you did.

Answer: A non-recourse loan, does not require a personal guarantee, therefore, you do not have to risk any of your personal assets if there is a default on your HUD loan. Furthermore, a non-recourse loan protects your estate. Upon your death, your heirs would have to qualify to assume your loan by meeting the same criteria you did. If they cannot do so they would have their only alternative would be to sell the property. With a HUD loan they will inherit the single asset entity (like an LLD) that owns the property directly which is making the loan payments.

Answer: Since these loans can be fixed for 35 – 40 years, they are most suitable for real estate investors that are planning on a long-term hold. Where most commercial loans mature in 5 – 10 years and have to be refinanced, a HUD Multifamily loan would be the only loan a long term investor would need. But because these loans can be assumed, and have such great rates, a short term hold can often work.