FHA® 223(f):
Refinance, Acquisition or Moderate
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 & Amortization | Up to 35 years, not to exceed 75% of the remaining economic life (fully amortizing) |
| Minimum DSCR | 1.176x for market rate, or LIHTC restricted, properties whose rents are < 10% below market; 1.15x for LIHTC restricted properties with rents at least 10% below market; 1.11x for properties having at least 90% rental assistance contracts |
| MAXIMUM LTV | 85% for market rate, or LIHTC restricted, properties whose rents are <10% below market; 87% for LIHTC restricted properties with rents at least 10% below market; 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; market rate, low-to-moderate income and subsidized multifamily properties |
| Eligible Borrower | Single asset entity (for profit or nonprofit) |
| Occupancy Requirement | Average 85% occupancy for the six months prior to HUD application submission; maximum economic underwriting occupancy of:
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| 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; remaining 50% will be held in escrow until all required repairs are completed; potential waiver is available to reduce holdback to 25% |
| Tax & Insurance Escrows | Monthly deposits required |
| Recourse | Non-recourse, subject to HUD Regulatory Agreement |
| Commercial Space | Maximum 25% of net rentable area and maximum 20% of effective gross income; minimum 10% underwritten vacancy |
| 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 asbestos-containing material testing; projects 30 years of age or older may require additional testing; costs can be reimbursed from loan proceeds at closing |
| Prepayment | Typically 10% year one, declining 1% per year; other prepayment options available subject to market conditions |
| Assumable | Subject to Arbor and HUD approval and payment of assumption fee |
| Good Faith Deposit | Negotiable based on project type and loan size |
| Expense Escrow | Yes – sufficient to cover Arbor’s expenses and third-party report costs |
| Origination Fee | Negotiable |
| HUD Application Fee | Nonrefundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD upon application submission |
| 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); 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; initial MIP is 1% of the loan amount due to HUD at closing; annual MIP rates:
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