FHA SECTION 221(d)(4) – Multifamily Accelerated Processing (MAP)

Loans to construct or substantially rehabilitate affordable and market rate multifamily rental housing

Affordable Housing

Affordable housing is defined as projects meeting either the minimum affordability requirement for Low Income Housing Tax Credits (LIHTC) or the requirements for project-based Section 8.
To qualify under the LIHTC affordability requirement, rent and income restrictions must be imposed, monitored and enforced by a governmental agency for at least 15 years after Final Endorsement by means of a recorded Regulatory Agreement requiring the project to meet either of the LIHTC restrictions, including income averaging as applicable: 20% of units at 50% of area median income (AMI); or 40% of units at 60% of AMI.
Projects need not use LIHTCs to qualify for affordable underwriting so long as they meet the requirements for LIHTC affordability.
To qualify as affordable based on project-based Section 8, (Broadly Affordable) the project must have a Housing Assistance Payment contract covering 90% of the units with a minimum remaining term of 15 years.

Projects must have 50% of their units restricted to households earning up to 120% of area median income (AMI).
Project must contain a use restriction and must be monitored by a state or local government entity annually. A minimum use restriction period of 10 years is required to ensure that middle income tenants benefit from this policy.
However, because individual state and local programs vary widely, HUD has waiver authority to approve a term of less than 10 years when enhanced benefits to middle income tenants exist (ex. the proposed use restriction is less than 10 years, but targeted units exceed the 50% minimum.) In no case, however, should the restriction agreement be less than 5 years.

Combines construction and permanent financing approval in a single transaction.
Loan is pre-payable, assumable and non-recourse; maximum 40-year term with full amortization.
The cost of rehabilitation must exceed the greater of a) 15% of the project’s replacement cost or b) $19,948 [1]per unit, adjusted by a high-cost factor; or c) involve the replacement of at least 2 major building components. Projects whose rehabilitation costs fall below these levels may qualify under Section 223(f).
Construction and rehabilitation costs are subject to Davis-Bacon wage determinations.
For for-profit owners, a Builder’s and Sponsor’s Profit and Risk Allowance (BSPRA) of 10% of the development costs may be capitalized in the loan and applied towards the cash equity requirement at closing when there is an Identity of Interest between the mortgagor and contractor.
In lieu of BSPRA, non-profit owners qualify for a Developer Fee of 8% of Mortgage Amount, but not less than $40k or more than $400k. (Market-Rate deals only)
Construction contingency requirements for all substantial rehabilitation projects must be 10-15% of construction cost.
Loan-to-cost (LTC) and debt service coverage (DSC) requirements are based on project type and loan size.

[1] Based on 2025 High-Cost Percentage Mortgagee Letter

Loans > $130 Million

Project Type	Loan to Cost (LTC)	Debt Service Coverage (DSC)
Affordable	87.00%	1.15 X
Market Rate	85.00%	1.15 X
Broadly Affordable and Middle Market	90%	1.11 X

0.30%	Application Fee to HUD (.15% at Pre-application that is non-refundable and .15% at the Firm Commitment stage
0.65%	Upfront Mortgage Insurance Premium (MIP) - .25% or .35% for tax credit/affordable deals.
0.50%	Inspection Fee
2.00%	Maximum Financing (Origination) Fee
1.50%	Maximum Placement Fee
2.00%	Costs of Issuance for Tax-Exempt Bond Transactions

An annual .65% Mortgage Insurance Premium (MIP) – .25% or .35% for tax credit/affordable deals is paid to HUD.

Full escrows required for property insurance, real estate taxes, and HUD mortgage insurance premium.
Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan. The amount of the annual deposit will be revised after 10 years based on a new capital needs assessment.
An Operating Deficit Escrow will be required. This escrow must be funded by the borrower at closing with cash or a letter of credit. For market rate and affordable new construction projects, and rehabilitation projects involving a substantial amount of resident displacement, the minimum escrow is:

Loan Amount	Minimum Operating Deficit Escrow
$25M – $75M	Greater of 3% of loan or 4-6 months debt service and MIP
>$75 M	12 months debt service and MIP
>$100 M	12+ months debt service and MIP

Market rate new construction projects require a Working Capital Escrow equal to 4% of the mortgage is required at closing. This deposit must be funded by the borrower with cash or a letter of credit. Half of this escrow (2% of the mortgage amount) will be dedicated to cover change orders during construction and the other 2% for excess soft costs. Market rate and affordable substantial rehabilitation projects require a 2% Working Capital Escrow – the contingency allowance covers change orders.