FHA® 223(f)

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Arbor provides FHA-insured, long-term, fixed-rate financing for refinance, acquisition or moderate renovation of multifamily projects nationwide. Arbor uses the single-stage Multifamily Accelerated Processing (MAP) Program to expedite underwriting and approval.

Loan Term and Amortization Up to 35 years, not to exceed 75% of the remaining economic life (Fully Amortizing)
Minimum DSC 1.176x Market Rate; 1.15x Affordable; 1.11x – 90% for Project-Based Rental Assistance;
Maximum Loan to Value/Acquisition Cost 85% Market Rate; 87% Affordable; 90% for projects with 90% or greater Rental Assistance.
Fixed Rate Yes
Eligible Properties Existing Multifamily projects at least three years old. Detached structures and row houses eligible. Market rate, low-to-moderate income and subsidized multifamily properties.
Eligible Borrower Single Asset Entity (for profit or non-profit)
Occupancy Requirement Minimum 85% occupancy for the last 6 months; Underwritten up to 93% occupancy for market rate, 95% for projects with 80% of units LIHTC restricted, 97% for projects with 90% of the units LIHTC restricted or HAP assisted. Project must demonstrate a pattern of stable occupancy for 6 months prior to application and maintained until closing.
Cash Out 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 remaining 50% will be held in escrow until all required repairs are completed. A potential waiver is available to reduce holdback to 25%.
Tax and Insurance Escrows Monthly deposits required
Recourse Non-recourse
Commercial Space Maximum 25% of net rentable area and maximum 20% of effective gross income; minimum 10% underwritten occupancy.
Required Reports Borrower is responsible for all required report costs, included but not limited to: Appraisal, Market Study, Environmental Phase I, Phase II (if applicable), and PCNA. Pre-1978 properties may require lead-based paint and asbestoscontaining material testing. Projects 30 years of age or older may require additional testing. Costs can be reimbursed from loan proceeds at closing.
Prepayment Negotiable. Generally two-year lockout with a 10% to 1% declining pre-payment penalty. Other pre-payment options are available.
Assumable Subject to Arbor and HUD approval and payment of assumption fee
Good Faith Deposit Negotiable based on project type
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs
Origination Fee Negotiable
HUD Application Fee Non-refundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD with the firm commitment submission package.
HUD Inspection Fee $30 per unit when repairs are less than $3,000 per unit. If above $3,000 per unit, 1% of the total cost of the repairs.
Legal/Closing Fee Borrower pays Arbor’s Counsel Fee and miscellaneous closing costs.
Rehabilitation Qualifications Repairs cannot exceed $15,000 per unit (adjusted for local high-cost factor), 15% of appraised value. Repairs/replacements are also limited to one major building component.
Davis Bacon Not applicable to this program
HUD Mortgage Insurance Premium

HUD sets the cost of the FHA Insurance. The initial MIP is 1% of the loan amount due to HUD at closing. Annual MIP rates:

  • Market Rate Properties: 0.60%
  • Affordable Properties: 0.35%
  • Broadly Affordable or Energy Efficient Properties: 0.25%
Arbor Commercial Mortgage | arbor.com | 800.ARBOR.10

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