FHA SECTION 223(f) – Multifamily Accelerated Processing (MAP)
Loans to purchase or refinance 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.
Program Features
Loan is pre-payable, assumable and non-recourse; maximum term of 35 years with full amortization.
The cost of repairs and initial deposit to a reserve fund for building/equipment replacement can be included in the financing.
Commercial space is permitted up to 25% of the net rentable area of the project or 20% of effective gross income; commercial space is underwritten at the lesser of 90%, the actual rate, or market indications.
The cost of rehabilitation must not exceed the greater of: a) $19,948 [1]per unit adjusted by a high-cost factor; or, b) involve the replacement of at least 2 major building components. Projects whose costs exceed these limits may qualify under Section 221(d)(4).
Projects must reach 1 month of program debt service coverage prior to filing an application and must be at 3 months of coverage before loan closing.
Loan-to-value (LTV) 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 Value (LTV) | Debt Service Charge (DSC) |
Affordable | 87% | 1.15 X |
Market Rate | 87% | 1.15 X |
Broadly Affordable | 90% | 1.11 X |
Loans > $130 Million
Project Type | Loan to Value (LTV) | Debt Service Charge (DSC) |
Affordable | 87% or 80% (cash out) | 1.25 X |
Market Rate | 75% or 70% (cash out) | 1.30 X |
- HUD permits cash-out refinances at 70% – 80% LTV. Fifty per cent (50%) of any cash out proceeds after funding transaction costs, including the assurance of completion requirements, must be held in escrow by the Lender until the required non-critical repairs are completed and HUD approves the release.
- For market rate properties, the underwritten physical occupancy rate is the lesser of 93% or that indicated by the market. For affordable properties, the underwritten physical occupancy is up to 95% for loans with more than 80% LIHTC units; and, up to 97% for projects with more than 90% Section 8 or LIHTC units.
- HUD permits secured secondary financing up to total debt of 92.5% LTV, or higher, for affordable projects.
fees
0.30% | Application Fee to HUD |
1.00% | Upfront Mortgage Insurance Premium (MIP) - .25% or .35% for tax credit/affordable deals. |
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 0.60% Mortgage Insurance Premium (MIP) – .25% or .35% for tax credit/affordable deals is paid to HUD.
Escrows
- Escrows are required for property insurance, real estate taxes, and HUD mortgage insurance premiums.
- Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan. Projects must obtain a new PCNA every 10 years, with the reserve for replacement deposit adjusted based on the results of the PCNA.
- Escrow equal to 120% of the cost of repairs is required at closing. For affordable and broadly affordable deals the escrow is 110%. Approximately 100% is funded from loan proceeds; the Borrower is required to fund the remaining 10% – 20%, which is released upon completion of repairs.