Finance

November 28, 2022

min read

Benefits of HUD financing

Benefits of HUD financing

HUD programs open a wealth of possibilities — Walker & Dunlop makes these possibilities a reality for our valued clients, no matter how complex the deal.

Our experts navigate you through the financing process. Reach out to us for certainty of execution, swifter processing, and the utmost reliable service on your next project. 

Looking to finance or refinance your new construction project? Walker & Dunlop is the leader in HUD new construction — #1 Nationwide1

Benefits of HUD “221(d)(4) / 220” New Construction Financing:

  • HUD’s “221(d)(4) / 220” program provides stable financing for new construction, especially during countercyclical times.
  • Allows for seamless Interest Rate Reductions when interest rates fall with virtually no net transaction costs.
  • Provides higher leverage than other sources: For loans < $75MM, 85% Loan-to-Cost or up to 90% Loan-to-Cost for affordable properties; For loans >$75MM, up to 75% Loan-to-Cost or up to 87% Loan-to-Cost for affordable properties.
  • Requires lower debt service coverage: 1.17x or as low as 1.11x for affordable properties.
  • Provides one loan with no need to source a construction-to-permanent debt option; interest-only during construction period and 40-year, non-recourse fixed-rate term.
  • Fully assumable.
  • Expedited processing times for affordable properties and projects located in Qualified Opportunity Zones (QOZ).
  • Can start the HUD process with limited plans and specs; HUD timeline is designed to move in tandem with the permitting and entitlement process, making the overall timing competitive with conventional options.

Have a newly constructed project in need of permanent financing?

Benefits of a HUD “223(f)” Refinance:

  • Eligible to submit after one month of debt service coverage.
  • Underwriting can begin pre-stabilization.
  • Higher leverage than other sources: 85% Loan-to-Value or up to 90% Loan-to-Value for affordable properties. 
  • Lower debt service coverage required: 1.17X or as low as 1.11X for affordable properties. 
  • Take advantage of this low cap rate and high rent growth environment with an 80% LTV cash-out perm loan
  • Borrowers can cash out above their cost basis
  • 35-year non-recourse max term

Sign up for email updates from Walker & Dunlop's HUD team to stay current on the latest news.

 

1HUD.gov Multifamily Lending – FY 2022 as of 9/30/22
The “(d)(4)” program refers to Section 221(d)(4) of the National Housing Act, which authorizes mortgage insurance for new construction or substantial rehabilitation of multifamily properties. The “220” program refers to Section 220 of the National Housing Act, which authorizes mortgage insurance for multifamily housing projects in urban renewal areas.

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