FHA / HUD Multifamily Loans

For Financing 5+ Unit Multifamily Properties
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FHA / HUD Multifamily Loan Programs

FHA (Federal Housing Authority) and HUD (Housing and Urban Development) refer to government loan programs that provide insurance for multifamily mortgages. FHA / HUD loan programs can be used for existing stabilized properties, new construction, or rehabilitation. HUD approved lenders can offer long term loans (up to 35 years) with the best rates in the market because the lenders are insured by the FHA against loss on mortgage defaults.

FHA / HUD loans are the often the best mortgage option for multifamily housing because it is a long term permanent debt option, but can be readily paid off at any time with a simple tax deductible prepayment penalty or fully assumed by a new property owner after a simple 0.05% one-time fee. These features can lead to a premium price in the event of a sale because the buyer has the option to either pay off the loan or assume the existing debt with a below market interest rate.

The biggest misconception about the HUD lending program is that HUD is only applicable for Section 8 and affordable housing. However, there is a very big difference between a HUD property, which is owned and operated by the government to provide affordable housing, and a property that takes advantage of the HUD loan. Many Class A, market-rate multifamily properties across the country can qualify for a FHA loan. HUD non-recourse loans can also be combined with local tax credits or municipal grants to create a compelling investment scenario.

Loan Amount:

$3 Million to $100 Million+

Max LTV:


Typical Term:

35 - 40 years
  • Lowest Rates
  • Very long Amortization (Up to 35 years)
  • Up to 90% LTV
  • Non-Recourse

Market Information
Pro Forma Financials
Schedule of Real Estate Owned
  • Experienced multifamily owner
  • 620+ credit score
  • Sufficient net worth and liquidity

How to Get a FHA / HUD Multifamily Loan

Arranging a HUD loan takes a bit of patience, which is generally the biggest drawback for using the program. Depending on the program, it generally takes 5–9 months from engagement to closing. This long lead time happens because the FHA authorized lender and HUD both underwrite the transaction. Because of this delay, acquisitions will often use bridge-to-HUD financing when waiting 6 months is not a viable option to secure the permanent debt. Working with a StackSource Capital Advisor is the easiest way to get started on your HUD loan. You can connect with an authorized FHA lender in the StackSource lender network and your advisor works directly with the lender on your behalf throughout the application process.

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Guide to FHA / HUD Multifamily Loan Programs

FHA Section 207 / 223(f): Purchase or Refinancing of Existing Multifamily Housing Projects

HUD’s 223(f) program allows sponsors to secure a 35-year term and amortization with a non-recourse loan at 83.3% LTV for market rate projects, 85% LTV for affordable housing projects, or 87% LTV for projects with over 90% rental assistance. When acquiring a new property, borrowers can work with lenders offering bridge-to-HUD financing to immediately secure a bridge loan to purchase the property that will be refinanced to a low rate HUD loan after completing the FHA HUD loan process (usually 5 to 9 months).

FHA Section 221(d)(4): New Construction or Substantial Rehabilitation of Rental Housing

This FHA loan program can be used to secure debt financing for market rate and affordable housing. This program is non-recourse and provides borrowers with up to 90% LTC (loan to cost) at a rate of 4.50%.

FHA Section 223(a)(7): Refinancing of Existing Multifamily Rental Housing

This section enables existing HUD FHA multifamily loans to be refinanced with a quicker closing and reduced fees.

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Further reading