Monthly Archives: October 2011

HUD Multifamily Financing Explained

For those of you looking to get a multi family project financed in this economy, HUD-backed commercial mortgage financing might be the best choice. Smart Rate partners with HUD to help get many multifamily projects financed in the greater Detroit Michigan area (and nationally too.)

Here are some guidelines to think about straight from the Hud website:

HUD Mortgage Insurance:

HUD Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing
Summary of Sections 207/223(F): Section 207/223(f) insures mortgage loans to facilitate the purchase or refinancing of existing multifamily rental housing. These projects may have been financed originally with conventional or FHA insured mortgages. Properties requiring substantial rehabilitation are not eligible for mortgage insurance under this program. HUD permits the completion of non-critical repairs after endorsement for mortgage insurance.

Purpose of the Program:

Section 223(f) insures lenders against loss on mortgage defaults. The program allows for long term mortgages (up to 35 years) that can be financed with Government National Mortgage Association (GNMA) Mortgage-Backed Securities. This eligibility for purchase in the secondary mortgage market improves the availability of loan funds and permits more favorable interest rates.

Eligible Properties:

The property must contain at least 5 residential units with complete kitchens and baths and have been completed or substantially rehabilitated for at least 3 years prior to the date of the application for mortgage insurance. The program allows for non-critical repairs that must be completed within 12 months of loan closing. Projects requiring substantial rehabilitation are not acceptable under this section and may not involve the replacement of more than one major system. The remaining economic life of the project must be long enough to permit a ten-year mortgage. The mortgage term cannot exceed 35 years or 75 percent of the estimated life of the physical improvements, whichever is less. Davis Bacon prevailing wage requirements do not apply to this program.

What Does This Mean For You As A Commercial Borrower?

If all that technical government language sounds a bit confusing, don’t worry. We’ll help you wade through all the fine print to get your project financed. Contact us to get a real world explanation about how HUD and Smart Rate might be able to help you get your multifamily project financed.

Fill out our rate quote form to get started on your next multi family project.

Or – Give us a call at (586) 298-2276 and we’ll be happy to give you a free, real world consultation, and let you know how we can help you get your next project funded.

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