HUD 223(a)(7) Loans

Affordable Refinancing for HUD multifamily loans

If you already have a HUD multifamily loan, such as a HUD 223(f) loan, an HUD 232 loan, or a HUD 221(d)(4) loan, there's no better way to refinance it than the the HUD 223(a)(7) refinancing program. The program is specifically designed to refinance loans for current HUD multifamily borrowers, reducing interest rates and increasing amortization in order to improve a multifamily property's cash flow. In addition, any prepayment penalties can also be added to a borrower's HUD 223(a)(7) loan, meaning that a developer won't have provide much cash out-of-pocket if their original HUD multifamily loan is less than 10 years old. And, just like other HUD multifamily loans, HUD 223(a)(7) loans are non-recourse.

Plus, HUD 223(a)(7) loans require remarkably little documentation; all that is needed is a new project capital needs assessment (PNCA). At Commercial Real Estate Loans, Inc., we understand that HUD multifamily loans are one of the most affordable and effective way to purchase multifamily and apartment properties-- and that HUD 223(a)(7) loans are the best way to refinance them. That's why we're excited to help you through each stage of the HUD 223(a)(7) application, approval, and closing process-- as well as answer any questions you might have about this incredibly effective form of refinancing. 


HUD 223(a)(7) Loan Terms 

HUD 223(a)(7) loans have terms including: 

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  • Loan Size: Loans are allowed up to 100% of the eligible transaction costs, including:
    • Existing debt principal 
    • Eligible repairs 
    • Initial replacement reserves
    • Prepayment penalties 
    • Third-party reports (the only one required is a project capital needs assessment, or PNCA) 
  • Loan Term: Loan term may be increased up to 12 years, as long as the new loan doesn't have a term greater than 40 years (for HUD 221(d)(4) loans and HUD 232 loans) or 35 years (for HUD 223(f) and HUD 232/223(f) loans) 
  • DSCR: 
    • Non-profit entities: 1.05x minimum DSCR
    • For-profit entities: 1.11x minimum DSCR

PROS:

  • Application can close in as little as 60 days
  • Allows loan term increase of up to 12 years, as long as new loan does not have a longer term than the original loan
  • Generous DSCR requirements; loans allow for a minimum of 1.05x DSCR for non-profits
  • Loans offer remarkably low interest rates
  • Loans are fully assumable with FHA approval
  • HUD 223(a)(7) loans are non-recourse, limiting liability for developers
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cons:

  • Mortgage insurance premiums (MIPs) are still required
  • An FHA application fee of 0.30% of the entire loan amount is required (half will be refunded at closing) 
  • Developers are required to pay for a project capital needs assessment (PCNA), though this can be rolled into the new loan

Commercial Real Estate Loans, Inc. is the partner you need to help acquire or refinance your next multifamily or commercial real estate project. Whether you're a small startup or an established company, we have the knowledge and experience to give you more financing options!