FHA 223(f) multifamily loans

Current limits by property type

HUD changed 223(f) twice in 2025: leverage went up in January, and the insurance premium came down in October. Many lender pages still show the old numbers. These are the limits in force for new applications:

Property	Maximum loan-to-value	Minimum DSCR	Underwriting vacancy
Market-rate	87% LTV1	1.15x DSCR1	3% (90%+ assisted), 5% (affordable), 7% (market rate)1
Affordable	90% LTV1	1.11x DSCR1
Rental assistance (most units)	90% LTV1	1.11x DSCR1
Cash-out refinance	Greater of 80% LTV or the cost to refinance2	Program DSCR
Large loans ($130 million4 and up)	1.30x DSCR, 75% LTV, 70% with cash out5

The loan is the lowest of several tests, not just the two ratios: loan-to-value, debt coverage, HUD’s statutory per-unit limits (for example $108,925 per unit before high cost adjustment⁶, raised in high-cost areas: Up to 270% of base limits; up to 315% case by case in High Cost Areas⁴) and, on a refinance, the cost to refinance (existing debt, repairs, reserves and closing costs) unless cash out is allowed.

Sizing example (illustration)

An illustration, not a quote: a market-rate, 96-unit property worth $12,000,000 with $780,000 of underwritten NOI (after HUD’s vacancy factor). The note rate is an illustrative 6.60%, plus the 0.25% (25 basis points) per year insurance premium, on a 35-year fully amortizing schedule. To be conservative the illustration includes the premium in the debt service.

Test	Arithmetic	Loan it allows
Loan-to-value	$12,000,000 x 87%	$10,440,000
Debt coverage	$780,000 / 1.15 = $678,000 of annual debt service; divided by the 7.54% constant (6.85% over 35 years)	$8,995,000
Loan	lowest test	$8,995,000 (75% LTV)

Coverage binds by more than $1.4 million, even at the higher post-2025 ratio. If the same property qualified as affordable (90% LTV, 1.11x DSCR), the coverage test alone would allow about $9,319,000. Because the loan fully amortizes, there is no balloon: the amortization schedule calculator shows the balance falling to zero over 35 years.

The 2025 premium cut, in dollars

HUD cut the insurance premium for every MAP multifamily program to one uniform rate. Annual: 0.25% (25 basis points) per year³. Upfront: 0.25% upfront, capitalized into the loan³. Who it covers: Applications submitted or amended on or after October 1, 2025, not yet initially endorsed³. The old 223(f) rates: Prior: 1.00% upfront and 0.60% annual; now 0.25% and 0.25%³.

On the illustration’s roughly $9,000,000 loan, the change is worth about $31,500 a year in annual premium and about $67,500 at closing in upfront premium (arithmetic on the before and after rates). Not retroactive: loans already initially endorsed keep their original MIP³. An older 223(f) keeps its higher premium unless it refinances, which is what 223(a)(7) is for. Green, Affordable and Broadly Affordable MIP discounts no longer exist (uniform rate replaced them)³.

Eligibility rules that trip people up

• Age of the property. Certificates of occupancy issued 3 or more years before application (newer properties need 1 month at the program DSCR)². As of October 2026, HUD Mortgagee Letter 2026-12 (October 14, 2026) opened 221(d)(4) new construction and, for properties under 3 years past certificate of occupancy, 223(f) to build-to-rent communities⁷.
• Occupancy. Stable occupancy of at least 85%², sustained, not a single good month.
• Size. 5 or more units².
• Commercial space. Commercial up to 25% of net rentable area and 20% of effective gross income². A ground-floor retail building with heavy commercial rent may not fit.
• Environmental. HUD runs its own environmental review on top of the Phase I. One example of a hard rule: At least 10 feet from the pipeline easement boundary⁸ for high-pressure lines.

Costs and timeline

Cost	Amount	Note
HUD application fee	$3 per $1,000 of loan (0.30%)2	Paid with the firm application
Application plus commitment fees	Up to $5 per $1,000 of the mortgage (0.50%) in total application-commitment fees9
Upfront insurance premium	0.25% upfront, capitalized into the loan3
Lender financing and placement fees	Up to 3.5% of the loan (5.5% in bond deals)2	A ceiling, not a quote
Repair inspections	1% of the cost of required repairs (HUD may set a higher minimum)9	Only if the loan funds repairs

HUD publishes no processing time. The process runs in two stages: the MAP lender underwrites and submits a firm application, then HUD reviews it before issuing a firm commitment. That second review is why 223(f) is a poor fit for a purchase on a normal contract timeline and a good fit for a refinance where the owner controls the calendar. Many owners bridge a purchase first and refinance into 223(f) once the property seasons; see bridge to agency takeout.

Prepayment

Prepayment generally prohibited for 5 years from endorsement². After that the lender and borrower set a declining premium at rate lock. A long lockout plus a declining premium is the price of the leverage and term; do not use 223(f) on a property you might sell soon.

What HUD and the MAP lender check

• Principals. Every principal goes through HUD’s previous-participation review, which looks at their history on other HUD-insured or assisted properties.
• Operating history. Trailing statements and rent rolls, with HUD’s vacancy factor applied regardless of actual occupancy.
• Physical condition. A HUD-format property condition assessment sets critical and non-critical repairs and the reserve for replacements.
• Rents. The appraiser tests in-place rents against the market; above-market rents are cut back in underwriting.

Deal killers we see most often

• The calendar. A seller who will not wait for a firm commitment.
• A recent certificate of occupancy without enough stabilized operating history.
• Repairs that grow into substantial rehab, which moves the deal to 221(d)(4) and prevailing wages.
• A principal with an unresolved HUD issue on another property.
• Existing debt that the new loan cannot cover at HUD’s coverage test, leaving a refinance gap; size it in the refinance gap calculator.

223(f) or an agency loan?

223(f) wins on leverage, term and the absence of a balloon. Fannie Mae and Freddie Mac win on speed, prepayment flexibility and fewer federal requirements. If you plan a long hold and can wait for HUD, 223(f) often wins on long-term cost. The full side-by-side is on FHA 223(f) vs agency.