Ten explainers on how HUD’s construction and substantial rehabilitation loan actually works — written from the MAP Guide, the mortgagee letters and the regulations rather than from other people’s marketing copy. Where a widely repeated figure turns out not to be a HUD rule, we say so.
HUD cut the mortgage insurance premium to a flat 0.25%, loosened DSCR and loan-to-cost, and added a middle-income tier. Most published 221(d)(4) material has not caught up.
A 221(d)(4) runs through concept, pre-application and firm commitment. Nine to twelve months is realistic. HUD publishes no binding review times, and its own watchdog explains why.
Appraisal, market study, Phase I, A&E review, geotechnical. The MAP lender engages them and the borrower pays — a distinction that surprises first-time sponsors.
FHA-insured multifamily is a Part 50 review performed by HUD. Part 58 enters when you layer on CDBG or HOME — and it adds a publication and objection cycle you do not control.
Prevailing wages apply. Whether you pay residential or the substantially higher building rate turns on how many stories you build — and the widely quoted 12-unit threshold is wrong.
BSPRA credits a presumed 10% builder profit toward equity — but only where the borrower and general contractor are related. And the profit caps everyone quotes are not HUD rules.
Working capital, assurance of completion, latent defects, operating deficit, replacement reserves. Several are a percentage of your loan, and they sit outside the mortgage.
If actual costs come in below what the firm commitment assumed, HUD reduces the mortgage at final endorsement. It is mandatory, not discretionary, and it surprises people.
Every controlling participant is reviewed against a ten-year history. A flag can be explainable or close to fatal, and it turns on facts that have nothing to do with this project.
Your note rate is the Ginnie Mae security coupon plus a servicing and guaranty spread of 25 to 50 basis points, plus MIP. Knowing the components tells you which are negotiable.
Send us the project and we will come back with a preliminary view — including which test we think binds.
Talk to Us