Investors, Do You Know Your Multifamily Loan Options?
The Department of Housing and Development (HUD)-insured multifamily loans often get a bad rap. Folks associate them with loans that take a long time to close, have a lot of red tape and are only for affordable properties. Some of this is misguided. The red tape and timeline are undoubtedly a bit more arduous than agency debt; however, a HUD 223(f) loan, with the right lender, may only take another 30-60 days to close than an agency loan.
Although Federal Housing Administration (FHA) debt may not be perfect for purchase execution, it is often the best for recapitalizations. FHA-insured permanent financing is generally non-recourse, up to 85% LTV, fixed and fully amortizing for up to 35 years (subject to the remaining economic life of the property), and priced better than Fannie, Freddie and CMBS, because of the lower risk rating of debt guaranteed by the U.S. government.