HUD 241(a) Loans

Supplemental Financing for HUD-Insured Multifamily Properties

If you currently own a property financed with a HUD multifamily loan, like a HUD 223f loan or a HUD 221d4 loan, a HUD 241(a) loan can provide you extra funds to make your property more energy-efficient, purchase new safety equipment, or expand the footprint of one of the existing buildings on the property. Just like other HUD multifamily loans, HUD 241(a) loans are assumable (with FHA approval), are non-recourse, and have generous DSCR and leverage requirements.

At Commercial Real Estate Loans, Inc., we know that HUD multifamily loans are an effective way to build, renovate, and purchase multifamily properties. Sometimes, however, developers need additional funds for necessary property improvements. Fortunately, our highly-qualified mortgage bankers can assist you with every stage of the HUD 241(a) application, approval, and closing process.  

HUD 241(a) Loan Terms 

HUD 241(a) loans have terms including: 

  • Loan Size: The maximum loan size is the lesser of:

    • 90% of the value of a new construction project (for profits), or 95% (for non-profit entities)

    • The project's maximum insurable amount, as calculated by the FHA/HUD

    • 90% of the project's NOI (net operating income), including monthly payments for the original HUD multifamily loan

  • Loan Term: Must be the same as the original loan. If there are less than 25 years left on the original loan, the term can go up to 40 years (or up to 75% of the useful life of any new improvements that are financed with the loan)

  • DSCR: 1.11x minimum DSCR



  • Generous DSCR requirements; loans allow for a minimum of 1.11x DSCR

  • Loans offer fixed interest rates

  • Loans are fully assumable with FHA approval

  • HUD 241(a) loans are non-recourse, which limits liability for investors and developers




  • Mortgage insurance premiums (MIPs) are still required

  • An FHA application fee of 0.30% of the entire loan amount is required

  • An FHA inspection fee of 0.50% of the loan amount is also required

  • Developers are required to pay for a variety of third-party reports, including environmental assessments

Other HUD 241(a) Fees and Costs 

As briefly mentioned in the previous section, one of the biggest costs of HUD 241(a) loans can often be the third party reports that are required, which usually include: 

  • Market studies

  • Environmental assessments

  • Seismic reports (in certain areas)

  • Full HUD/FHA appraisals

  • Architectural and engineering reports

In addition, HUD 241(a) loans typically require borrowers to pay financing/permanent placement fees at closing, which often come out to 3.5% of the loan amount. 

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.