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Multi-Family Loans - FHA 221(d)(4)

Multi-Family Non-Recourse

Ground Up Development or Substantial Rehabilitation

The FHA 221(d)(4) loan guaranteed by HUD is the multifamily industry’s highest leverage, lowest-cost, non-recourse, fixed rate loan available. The 221(d)(4) loan is fixed and fully amortizing for 40 years, not including the up-to-three years, interest only fixed rate during construction period.

HUD loans, unlike most bank loans, are almost completely asset-based. This means that HUD scrutinizes the property location, the pro forma rents and expenses, supply in that sub-market, and the development team to ensure the project successfully comes out of the ground.

Eligible properties include, construction or substantial rehabilitation of detached, semi-detached, row, walkup, and elevator-type multifamily properties including market rate, low-to-moderate income; and subsidized multifamily, cooperative housing and affordable housing properties with at least 5 units.


40 Year fixed and fully amortizing interest rates
Interest-only during the construction period (3 years)
All loans must go through HUD pre-review process
Adherence to prevailing wage standards is required
Annual audit of operations is required
Hard second liens are not allowed, but soft seconds and stock pledges are allowed if structured in accordance with HUD requirements.
Bonded General Contractor is required
Minimum loan amount is $2 million (exceptions are made on case-by-case basis)
There is no maximum loan amount
All loans are non-recourse to key principals
All loans are fully assumable subject to FHA approval

No Pre-payment penalty if loan is assumed.

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