|
Commercial Mortgage Loans |
|
|
 |
| Why Choose Capital Assets,Inc |
 |
| Capital Assets,Inc has the knowledge,
expertise and strategic relationships required to
provide you with the most competitive rates and terms
for your commercial property loan. |
-
Multiple commercial financing options
- Competitive interest rates, terms and costs
- Knowledgeable and seasoned commercial mortgage
specialists
- Certainty of execution
- Convenient electronic loan process saves you
time and money
|
|
|
|
| Request a Quote Today! |
 |
| Provide some basic information
about the property and commercial real estate financing you’re
seeking and we will provide a no cost no obligation
quote. |
-
Security and privacy protected
-
No social security number required
-
No credit inquiry
-
No cost or obligation
|
 |
|
|
| Commercial Learning Center |
 |
|
|
|
|
|
|
 |
|
|
Home >
Commercial Loan Center Refinance or Purchase |
HUD FHA 223(f) Apartment Loans Overview
|
HUD 223(f) apartment
loans are available for the acquisition or refinancing
of 5+ unit multifamily properties and are a great
financing option for borrowers looking for maximum
leverage and longer fixed rates and terms. There are no
income or rent restrictions under Section 223(f) unless
otherwise required by a project based HAP contract or
other regulatory agreement.
HUD FHA 223(f)
insured mortgages are non-recourse with no market -
economic or population - restrictions.
-
Loan sizes above $1 million - no maximum
-
83.3% LTV for market rate apartments
-
87% LTV for project based rental assistance
|
-
Up to 35 year fixed rate terms
-
1.17 minimum DSCR
-
HUD insured mortgages are non-recourse
|
|
|
 |
 |
HUD FHA 223(f) Multifamily Loan Program Guidelines
|
|
Eligible Properties |
-
5+ residential unit
properties, including, detached, semidetached, row,
walkup, or elevator-type rental or cooperative
housing.
-
Properties must have complete
kitchens and baths and have been completed or
substantially rehabilitated for at least 3 years
prior to the date of the application for mortgage
insurance.
- The program is available for market rate
rental housing or for properties accepting
rental assistance, either tenant based or
project based.
- Commercial
area is permissible, but cannot exceed
20% of the net rental area, or 25% of
the gross revenues.
- Student
housing properties that offer rents per
room, not per unit, are ineligible.
- 30 day minimum
lease term required.
- The property
must meet a minimum three-year stabilization
requirement (property must have been built
and stabilized for three or more years
before receiving a HUD insured mortgage). Properties with a
project based affordability component (HAP
Contract or other regulatory agreement) may
apply for a waiver.
- The loan may
include repair costs not to exceed 15%
of its value after repairs or no more
than $6,500 per unit (except in high
cost areas) - whichever is greatest.
Repairs may not include replacing more
than one major building system such as
plumbing or electric.
|
|
Loan Term |
The lesser of 35 years or a maximum term
not to exceed 75% of remaining economic
useful life of the property. |
|
Eligible Locations |
All 50 states, Puerto Rico, U.S. Virgin
Islands, and Guam. No market - economic or
population restrictions. |
|
Loan Size |
$1,000,000 with no maximum. |
|
Maximum LTV |
-
83.3% for market rate
properties.
-
87% for affordable properties.
|
|
Minimum DSCR |
1.17. 1.15 for affordable properties |
|
Minimum Occupancy |
Property must demonstrate a pattern of
stable occupancy for 6-Months prior to
application and maintained until closing. |
|
Interest Only |
N/A. |
|
Prepayment Penalty |
Negotiable - typically a two-year lock
out followed by a step down premium (e.g.
8,7,6,5,4,3,2,1). |
|
Guarantee |
Non-recourse subject to
standard carve-outs. |
|
Assumable |
Yes, subject to lender approval. |
|
Supplemental Loan |
Available 12 months from date of closing
of first loan. |
|
Subordinate Debt |
Permitted up to 7.5% on an exception
basis. |
|
Rate Lock |
At commitment. |
|
Cash Out Refinances |
Cash out allowed when 80% of value
exceeds existing debt plus transaction
costs, but only 50% of the net cash will be
released at closing. The other 50% will be
escrowed until completion, inspection and
approval of the non-critical (immediate)
repairs. |
|
Escrows |
-
Tax and Insurance Impounds:
Required.
-
Replacement Reserves: Required
- Monthly deposit required and amount depends on
property condition.
-
Initial Deposit to Reserve
Fund: Required - One time deposit may be required
depending on property condition.
-
Critical and Non-Critical
Repair Escrow: May be required for properties with
life, safety, health or code related repair and/or
maintenance concerns.
|
|
Fees and Expenses |
-
Third Party Reports:
appraisal, engineering report, environmental
analysis and flood certification.
-
FHA Inspection Fee: 1% of
repair costs or $30 per unit if repairs are less
than $3,000 unit.
-
FHA Exam Fee: $3 per $1,000 of
the loan balance.
-
Financing Fee: 1%-3% depending
on loan size and loan complexity.
-
Permanent Placement Fee: 1%-2%.
-
First Year Mortgage Insurance
Premium: 1% of loan amount for market rate
properties and .25%-.35% for affordable properties.
Monthly Mortgage Insurance Premium: .60% and
.25%-.35% for affordable properties.
-
Borrower's Legal: Estimated at
$10,000-$20,000.
-
Title & Recording Fees: TBD.
|
|
Sponsor Requirements |
-
Experienced owner operators
preferred.
-
Minimum credit and financial
capacity requirements.
-
HUD experience preferred.
|
|
|
|
 |
 |
|
|
|
HUD FHA 223(f) Insured Mortgage Advantages and
Disadvantages
|
The HUD FHA 223(f) insured
mortgage program for apartment and multifamily
properties is one of the best financing programs
available. However, it's not the right choice for every
sponsor or every property. Below is what you need to
know that underwriting and programs guidelines don't
tell you when considering a 223(f) apartment loan.
Advantages
-
Highest LTV in the market
-
Eliminate refinance and interest rate risk with
fixed rate terms up to 35 years
-
Low fixed rates based on GNMA securities
-
Non-recourse and assumable - makes for a great exit
strategy especially in a rising rate environment
-
No defined financial capacity requirements
-
No geographic restrictions
-
No minimum population requirements
-
Supplemental financing available
-
Funds available for repair/improvement
|
Disadvantages
-
Longer processing times - 120 days at a minimum (6-9
months is typical)
-
Higher fees - HUD and FHA fees add to the overall
cost of the loan
-
Mortgage Insurance Premiums (MIP) - Initial and
annual premiums
-
Annual audited operating statements required
-
Replacement reserve escrows required
-
HUD property inspections required
-
Owner distribution restrictions
-
Cash out restrictions
|
|
In General |
| Property condition is
important to HUD, both during initial
underwriting and over the life of the loan. In a
way, they are your partner in the project. They
control owner distributions and require annual
inspections and financial statement audits. A
replacement reserve escrow is established at
closing and HUD can determine what and when you
make repairs/improvements to the property.
Lastly, the 223(f) loan is costly and is a long
and tedious process. The program works best for
newer or recently renovated properties with
experienced sponsors and third party management.
If you can work with all of the above, there is
no better financing option available. The 35
year fixed rate term eliminates refinance and
interest rate risk, the non-recourse feature
eliminates personal and contingent liability and
the cost, if amortized over the term of the loan,
is typically less costly than having to
refinance your loan every five or ten years. |
|
|
|
|
|
|
|
|
|
