Affordable Housing Loans/Financing for Apartments/Multifamily

Since 2002, Apartment Loan Store has offered 4 Affordable Housing Loan programs nationally. These programs have been created to preserve existing affordable housing apartment complexes and to encourage the development of new ones.

 

Affordable Housing Apartment/Multifamily Loan Programs:

1. HUD/FHA Affordable Housing Loans/Financing  (Lowest Fixed Rate)

To qualify for HUD affordable financing the multifamily project has to have 25% of the units at 60% of AMI (Area Medium Income) or 20% of the units at 50% of AMI. This program is for new construction, substantial rehabilitation, or purchase/refinance of existing apartment complexes.

 

• Minimum Loan:  $5,000,000 for New Construction, $3,000,000 for purchase or refinance of existing multifamily properties

• LTC and LTV: Up to 87% of Cost for New Construction with no LTV calculated,  or up to 87% LTV for the purchase or refinance of existing multifamily properties. Existing properties must be at least 3 years old

• DSCR:  1.15    1.11 for properties with 90% or greater rental assistance

• Term:  40 Years for New Construction, 35 Years for Existing Multifamily properties

• Amortization: 40 Years for New Construction, 35 Years for Existing Multifamily

• Interest Rate:  Low rate tied to the 10 year US treasury yield fixed for 40 years for New Construction and 35 Years for Existing Multifamily.

• Occupancy Requirement:  90% for 90 days for existing properties

• Recourse:  Non-Recourse Loan

• Assumable:  Yes subject to FHA approval and a ½% fee

• Prepayment Penalty:  Declining for the first 10 years

 

2. Fannie Mae Affordable Housing Loans/Financing

For acquisition or refinance of affordable housing multifamily properties that are subject to low income rent restrictions or receive LIHTC (Low Income Housing Tax Credits)

• Minimum Loan:  $1,000,000

• Loan to Value:  Up to 90%

• Term:  10 to 30 Years

• Amortization:  Up to 30 years

• DSCR: 1.15

• Interest Rate:  Fixed for 10 to 30 years, tied to corresponding US treasury yields or adjustable rate priced off the 1 or 3 month LIBOR rate

• Minimum Occupancy Requirement:  85% for 90 days and 70% economic occupancy

• Recourse:  Non-Recourse Loan

• Assumable:  Yes with a 1.00% fee

• Commercial Space: Maximum 35% of net rentable area and 20% of effective gross income

• Prepayment Penalty:  Yield Maintenance

• Supplemental Loans:  Yes, after 12 months and up to 75% of Appraised Value

 

3. Freddie Mac Affordable Housing Loans/Financing

For the acquisition or refinance of affordable multifamily properties.  Eligible properties must have 20% or more units rented at or below 50% of AMI (Area Median Income) or 40% or more units rented at or below 60% of AMI.  Other affordability configurations will be considered.

• Minimum Loan:  $3,000,000

• Loan to Value:  90% of market value with HUD Risk Sharing LTV or 80% LTV without HUD Risk Sharing.

• Term:  7 to 30 years

• Amortization:  Up to 30 years

• Interest Rate:  Tied to corresponding US Treasury Yields

• DSCR:  1.25 standard, or 1.15 with HUD Risk Sharing, Cash out refinance: 1.30 or 1.20 with HUD Risk Sharing

• Minimum Occupancy Requirement:  90% for 90 days

• Recourse:  Non-Recourse Loan

• Assumable:  Yes with a 1.00% fee

• Prepayment Penalty:  Yield Maintenance

• Supplemental Loans:  Permitted after 12 months

 

4. USDA Affordable Housing Loans/Financing  

USDA Financing is for new construction, Rehabilitation and the purchase of affordable rent multifamily properties. The program is eligible only in rural communities of less than 50,000 population.  Property cannot be in close proximity to a major population area.

• Rehab if needed must be at least $6,500 per unit

• Commercial Space cannot exceed 10% of gross SF, and/or 10% of total income

• Average rents cannot exceed 30% of 115% of AMI (Area Medium Income)

• Income for Tenants cannot exceed 115% of AMI

• Interest rates can be fixed for the life of the loan.  Rates based on the 30 year treasury bond rate plus an index

• Interest Rates fixed for up to 30 years.  40 years for New Construction

• Amortization:  30 years.  Maximum 40 years for new construction

• Term:  30 years for purchase loans,   40 Years for New Construction

• LTV up to 90% for profit entities.  97% for non-profit entities

• Minimum Loan: $1,000,000    Maximum Loan: None

• Recourse:  Loan is Non-Recourse

• DSCR: 1.15

• Prepayment penalty:  Declining for the first 10 years.