Question 1

What is an FHA commercial loan?

Accepted Answer

FHA commercial loans are government-insured loans available through the Federal Housing Administration (FHA) for multifamily properties (5+ units), healthcare facilities, and hospitals. The most common programs are the FHA 221(d)(4) loan for new construction or substantial rehabilitation, and the FHA 223(f) loan for acquisition or refinancing of existing properties.

Question 2

What are the key terms of an FHA 223(f) loan?

Accepted Answer

FHA 223(f) loans offer up to 80% LTV for acquisitions and 80% for refinances (85% for non-profit borrowers). The loan term is typically 35 years (or the remaining useful life of the property). Rates are fixed and competitive, and the loan is non-recourse (with standard carve-outs). The loan is fully assumable.

Question 3

What are the key terms of an FHA 221(d)(4) loan?

Accepted Answer

FHA 221(d)(4) loans finance ground-up construction or substantial rehabilitation of multifamily properties. They offer up to 90% LTV (83.5% for for-profit borrowers with LIHTC), a 40-year term (plus up to 3 years of construction), and fixed rates. The loan is non-recourse and fully assumable.

Question 4

How long does it take to close an FHA multifamily loan?

Accepted Answer

FHA multifamily loans typically take 4 to 6 months to close due to the government review process. The timeline includes a FHA lender application, architectural review, environmental review, and HUD firm commitment. Borrowers who need faster closing should consider bridge or conventional financing.

Question 5

What are the advantages of FHA multifamily loans?

Accepted Answer

FHA multifamily loans offer the highest LTV in the market (up to 90% for construction, 80% for acquisition), the longest terms (35 to 40 years), fixed rates, non-recourse structure, and full assumability. The trade-off is a longer closing timeline (4 to 6 months) and higher upfront fees (MIP, inspection, and processing costs).

Question 6

Are FHA multifamily loans non-recourse?

Accepted Answer

Yes. FHA multifamily loans are non-recourse, meaning the lender's only remedy in the event of default is to take the property. The borrower is not personally liable. However, standard 'carve-out' exceptions apply, such as fraud, misappropriation of funds, or bankruptcy, which can trigger personal liability.

FHA / HUD Multifamily Loans

Key Program Parameters

FHA/HUD Programs We Work With

FHA Sec. 223(f)

FHA Sec. 221(d)(4)

LEAN 232 Healthcare

FHA 223(a)(7)

FHA Sec. 242 Hospitals

Why FHA/HUD?

Up to 90% LTV

40-Year Terms

Non-Recourse

Lowest Long-Term Fixed Rates

Frequently Asked Questions

Apply for FHA/HUD Financing