| Eligible MultiFamily Projects |
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a) |
Market rate, moderate-income and subsidized properties |
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b) |
Existing projects, at least three years old, with no more than minimal required levels of repair and with no substantial rehabilitation within the past three years. |
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c) |
Student housing is not excluded, but multiple rents from one unit will not be underwritten. |
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d) |
Limitation on commercial space: no more than 20% of the net rentable area and 20% of effective gross income. |
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| Borrower |
Single-Asset entity |
| Loan Amount |
No minimum or maximum |
| Interest Rate |
The interest rate is fixed for the term of the loan |
| Loan Parameters |
The maximum loan amount is the least of:
| |
a) |
85% appraised value |
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b) |
Loan amount that would achieve a debt service coverage ratio of 1:18 to 1:0 |
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c) |
Refinancing: 100% of outstanding debt plus transaction costs and proposed repairs. (If an equity take out is being requested, then the loan amount may be 80% of the project's appraised value under this loan criterion if that amount is greater than the cost of the refinance.) |
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d) |
Acquisition: 85% of the acquisition price plus transaction costs and proposed repairs. |
|
| Recourse |
Non-recourse |
| Term And Amortization |
Maximum term of 35 years; loan will fully amortize over term. |
| PrePayment |
Negotiable. Typically two-year lockout with 8% penalty in the third year, reducing 1% each succeeding year. |
| Financing Method |
Conventional or tax-exempt bonds |
| Interest Rate Set |
After acceptance of FHA commitment and prior to closing. |
| Assumable |
Loan is assumable, subject to HUGD approval and payment of an assumption fee and related transaction expenses. |
| Fees And Expenses |
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a) |
FHA application fee: 0.3% of the loan amount due at application |
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b) |
FHA Mortgage Insurance Premium: 1% of the loan amount paid at closing. Thereafter, annual mortgage insurance premium of 0.45% paid with monthly mortgage payments. |
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c) |
FHA Inspection Fee: the greater of $30 per unit or 1% of the cost of repairs where repairs are more than $3,000 per unit, paid at closing, to cover physical inspections of the property. |
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d) |
Financing and Permanent Placement Fees: up to 3.5% of loan amount, paid at closing. |
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e) |
Third party reports and other actual expenses incurred by Lender. |
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| Escrows |
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a) |
Replacement Reserves are required in accordance with HUD guidelines; the amount determined in conjunction with the third-party engineer report. |
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b) |
Taxes and Insurance are required to be escrowed monthly. |
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| Processing And Timeline |
Application to HUD is typically submitted within 45 to 60 days from engagement and HUD has 60 days to approve the application for firm commitment upon receipt. |
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