Mortgage Banking - FHA Financing Programs
FHA Section 223(f) Insured Mortgage - Acquistion / Refinancing - Permanent Financing Programs
PROGRAM OUTLINE
Program provides funds for the refinance or acquisition of an existing multifamily project. It is possible to finance 100% of all transaction costs. Owners having low-leverage debt may take cash out. This program is provided through one of our correspondent lenders.
PROJECT CRITERIA
Must be an existing multifamily market rate rental project at least three years old
No rehabilitation permitted but repairs may be made for up to the lessor of:
o 15% of the estimated property replacement cost after completion of repairs, replacements and improvements or
o $6,500 per unit in repairs, replacements or improvements as adjusted by the HUB/PC high cost percentage for that area (175% increase in high cost areas)
If two or more major building components are being replaced, then the project may come under the FHA 221(d)4 substantial rehab program instead of the FHA 223(f) program.
Commercial area shall not exceed 20% of the net rental area or 25% of gross project income
Sustaining occupancy must have been reached or a 12 month operating deficit account may be established
An initial capital replacement reserve escrow must be established with monthly payments into escrow included with debt service
MORTGAGE TERMS
Fixed rate, level amortization, non-recourse, fully assumable, and 100% insured by FHA
Term - up to 35 years
Refinancing determined by lesser of: statutory limits or
o 223(f) with 90% or greater rental assistance - loan amount supported by 87% of net operating income (1.15 debt service coverage) - 87% of project costs
o 223(f) - Affordable - loan amount supported by 85% of net operating income (1.176 debt service coverage) - 85% of project costs
o 223(f) - Market Rate Refinance or Acquisition - loan amount supported by 83.3% of net operating income (1.20 debt service coverage) - 83.3% of project costs
Loan Amount not to exceed 80% of value if cash proceeds are taken out
Low interest GNMA Mortgage Backed Securities or whole loans
Tax exempt bonds
PREPAYMENT PENALTIES/LOCKOUTS
No yield maintenance required
Prepayment lockout penalties are negotiated at the time of interest rate lock
FINANCING COSTS (based on loan amount)
PAID AT APPLICATION
0.3% for a Firm Commitment to insure a mortgage. This fee is an FHA exam fee and is non-refundable and paid to HUD
Appraisal, engineering, and environmental report costs if under MAP
Lead base paint report for pre-1978 properties
Paid at Closing:
Applicable GNMA discount fees or similar fees charged by private programs
1% for the first year's Mortgage Insurance Premium (MIP) payable to HUD
100% of the cost of repairs (mortgage proceeds) must be set aside in an escrow account plus a 20% letter of credit for Assurance of Completion of Repairs
financing fee
ANNUAL FEES
0.45% MIP
0.25% to 0.50% Annual GNMA Guarantee / Servicing Fees
The information above is subject to change. The information above is believed to be accurate, however, no warranties are implied or expressed. Information is available on other FHA programs upon request.