Mortgage Banking - FHA Financing Programs

FHA 221(d)(4)Insured Mortgage - New Construction and Substantial Rehabilitation - Permanent Finance Programs

New construction or substantial rehabilitation program, providing long term, fixed rate, fully assumable non-recourse financing. Loan provides for both construction and permanent financing in one commitment without occupancy requirements.  This program is provided through one of our correspondent lenders.


Multifamily market rate rental apartment complexes 
Davis Bacon labor standards and prevailing wage requirement apply to construction
Projects with LIHTC (Low Income Housing Tax Credits), new construction and sub-rehab are eligible

Fixed rate, level amortization, non-recourse, fully assumable and 100% insured by FHA
Term - up to 40 years permanent loan plus construction period
Mortgage amount determined by lesser of: statutory limits

o     221(d)4 with 90% or greater rental assistance - loan amount supported by 90% of net operating income (1.11 debt service coverage) - 90% of project costs

o      221(d)4 Affordable - loan amount supported by 87% of net operating income (1.15 debt service coverage) - 87% of project costs

o      221(d)4 Market Rent - loan amount supported by 83.3% of net operating income (1.20 debt service coverage) - 83.3% of project costs


Taxable low interest GNMA Mortgage Backed Securities
Tax exempt bonds

Application Fees:
0.3% of mortgage at application
Third party reports

0.45% Construction Inspection fee paid to HUD
HUD permits a 2% Financing Fee
HUD permits a 1.5% Placement Fee
Discounts may be included in mortgage proceeds for GNMA MBS or private financing
.45% MIP per year of estimated construction period for low income housing tax credit (LIHTC) transactions.  Otherwise .90% MIP per year of estimated construction period
4.0% Working Capital Letter of Credit during construction period
Operating deficit escrow may be required
Assurance of completion LOC or payment and performance bond (based on construction contract)

0.45% MIP for LIHTC projects (payable monthly) or  0.90% MIP for non - LIHTC projects (payable monthly)
0.25% to 0.50% annual GNMA Guarantee Fee/Servicing Fee

No yield maintenance required
Prepayment lockout, penalties are negotiated between investor and borrower at the time of interest rate lock

The information above is subject to change.  The information above is believed to be accurate, however, no warranties are implied or expressed.  Information is available on other FHA programs upon request.