Opening of Ace Hardwood Store. Loan provided by Commercial Loan Direct.
Written by Leane Eicoff| September 28, 2018
In addition to its healthcare and special needs programs, the Federal Housing Authority (FHA) branch of the US Department of Housing and Urban Development (HUD) offers government guarantees on various types of multifamily mortgages through its Office of Multifamily Housing Programs. These loans are available for conventional apartments, low-income housing, manufactured housing communities, cooperative housing, and seniors housing. This type of loan is only for very seasoned commercial real estate investor/owners because of the extensive paperwork, reporting, reserves, and experience requirements.
* Although $1 million is technically the minimum some lenders will underwrite at, we only recommend FHA apartment loans in excess of $5,000,000 unless being done as part of a larger portfolio finance because of the fees and extensive paperwork.
FHA Apartment Loans are priced based on the corresponding treasury and a spread, which takes into account the loan amount, term, LTV, and lender yield requirements. Pricing considerations the borrower should be aware of are the following:
The FHA Apartment Loan application process (whether for construction financing or financing for existing properties) is quite tedious. Because it is a government-guaranteed program at high leverage, the underwriting and due diligence requirements are extensive to make sure the property serves the community, the borrower has enough experience, and the government is protected from potential losses. However, for the right investor, this is a great product because of the very long fixed terms and low interest rates.
FHA Apartment Loans are typically serviced by the originator/underwriter, but may be transferred to third parties.
Standard FHA Apartment Loan Insurance Origination
Special Needs
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