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Multifamily
HUD 223(a)(7)
Streamlined Refinance of Existing HUD-Insured Loan
Program Overview
Provides a streamlined refinance to reduce the interest rate and debt service cost and extend the loan term on existing HUD-insured properties.
Typical Terms
- Borrower Type
- For-Profit or Non-Profit single asset borrower entity
- Recourse / Guaranty
- Non-recourse
- Loan Term / Amortization
- Loan term may be extended up to 12 years beyond the maturity date of the original loan but cannot exceed the term on the original loan
- Interest Rate
- Determined by market conditions and fixed for the full term of the loan
- Loan Parameters
- Maximum loan amount equal to the lesser of: (1) original loan amount; or (2) principal balance on the current loan plus loan transaction costs, including repairs, pre-payment penalties, reserve deposits, and loan closing costs. Cash out is not permitted.
- Underwriting Parameters
- Requested loan amount must meet a minimum 1.11x DSCR for market rate and affordable properties and 1.05x DSCR for projects with 90% or more Project-Based Real Assistance with a remaining term exceeding 15 years
- Prepayment
- Typically, 10-year step down (10% in year 1, declining 1% annually thereafter)
- Assumption
- Loans are fully assumable, subject to HUD approval.
- HUD Application Fee
- 0.15% of the loan amount due at Application submission
- HUD MIP
- 0.25% due at closing and annually, for all property types
- 3rd Party Reports
- Project Capital Needs Assessment (PCNA) required if extension of loan term is requested
- Reserves
- Typical Tax and Insurance escrows (including MIP) and Replacement Reserves as determined by PCNA and program requirements with a minimum annual deposit of $250/unit
- Repairs
- The scope of repairs must be routine and may not exceed $1,500 per unit, excluding the cost to remedy accessibility deficiencies
- Timeline
- Typically 2-4 months from engagement to closing
Eligible Property Types
- Existing HUD-insured multifamily properties