HUD 223(a)(7) Loan - Refinance of Existing HUD Loans

Eligible Properties

Existing FHA-Insured Multifamily Properties
Eligible Borrowers

Single-Asset, Special Purpose Entities (For-Profit or Non-Profit)
Loan Amount

Entity can borrow up to 100% of the original principal balance (subject to General Loan Parameters)
Location

Nationwide
Term & Amortization

The remaining term of the mortgage plus 12 years (subject to HUD approval) not to exceed the term of the original FHA-Insured mortgage
General Loan Parameters

The maximum loan is the lesser of:

  • The original FHA-Insured mortgage amount 
  • The outstanding mortgage plus all closing costs, capital
    improvements, prepayment penalties, and repairs
  • 1.10x Debt Service Coverage
Interest Rate

Fixed rate, subject to market conditions at the time of rate lock
Recourse

None, except standard carve-outs
Assumable

Yes, subject to HUD approval
Prepayment

Typically loans are prohibited from prepayment for the 1st year, then have a 9% penalty declining 1% each year thereafter until 0%.  Alternative lockout and prepayment structures are available.
Mortgage Insurance Premium

0.50% at Closing

0.50% Annually
Professional Liability Insurance

HUD requires a minimum coverage of $1 million per occurrence and $3 million aggregate.  Waivers may be granted in cases where premiums are high and claim history is clean.
Other
  • Cash out refinancing is not permitted
  • PCNA report required for Multifamily and term extensions