HUD 223(f) Loans

Fixed-Rate, Non-Recourse Loans for Multifamily Acquisitions and Refinancing

In today's market, the HUD 223(f) loan is one of the most cost-effective methods to purchase or refinance a multifamily property. In recent years, the 223f program has become increasingly popular due to the fact that it offers long loan terms, high leverage, and competitive interest rates. On top of that, 223(f) loans are also non-recourse. Despite that, many investors and developers still believe that the HUD 223(f) loan is just for affordable properties or non-profits.

However, this simply isn't the case. While affordable properties do get some additional benefits under the program, a HUD 223(f) loan is also an excellent way to buy or refinance market-rate multifamily properties. At Commercial Real Estate Loans, Inc., our experienced mortgage bankers can to guide you through the entire HUD 223(f) loan process and help you achieve a successful closing. 

HUD 223(f) Loan Terms and Requirements

HUD 223(f) loans have terms including: 

  • Loan Amount: Minimum loan amount of $1 million (exceptions can be made on a case by case basis)

  • Loan Term: Minimum loan term of 10 years, and a maximum term of 35 years (or 75% of the property's remaining economic life)

  • Leverage:

    • Market rate properties: 83.3% LTV

    • Affordable properties: 85% LTV

    • Rental assistance properties: 87% LTV

  • Interest Rates: Fixed, terms range from 4.10% to 4.75% (including MIP), as of Jan. 2019

  • DSCR:

    • Market rate properties: 1.17x minimum DSCR

    • Affordable properties: 1.15x minimum DSCR

In addition, properties being acquired or refinanced with a HUD 223(f) loan must: 

  • Be at least three years old (for new properties), or have had the last substantial renovation three years ago or more (for renovated properties)

  • Owner/developer must place funds monthly in a replacement reserve account

  • Must undergo annual operational audits


  • Flexible loan amounts

  • Very competitive interest rates

  • Long loan terms, up to 35 years for some properties

  • Loans are fully assumable

  • No population or geographic restrictions

  • Supplemental financing is allowed



  • May take longer to process than privately insured multifamily financing (sometimes 100+ days)

  • Rate locks aren't issued until a borrower gets a commitment from HUD, which leads to uncertainty

  • Mortgage insurance premiums (MIPs) must be paid initially, and then on a monthly basis

  • Owners can only get distributions two times a year

Additional HUD 223(f) Fees, Requirements, and Information

In addition to paying regular fees like MIPs and paying for annual audits, investor/developers using a HUD 223(f) loan will also have to pay for third party reports, including FHA/HUD appraisals, environmental reports and market studies. Plus, they'll also have to pay other costs, including FHA inspection fees, title and recording fees for the property (for acquisitions), as well as any associated legal costs.  

Despite those extra fees, if a property has a certain number of affordable units, it may qualify for low income housing tax credits (LIHTCs), nearly $8 billion of which are available each year from state and local government agencies. There are two general types of credits, 4% credits and 9% credits. HUD 223(f) affordable housing acquisition projects are typically eligible for the 4% credit. The 9% credit is usually reserved for the new construction or substantial rehabilitation of affordable housing projects. 

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!