Acquisition Construction Financing
FHA SECTION 202/223(f)
Financing for the Prepayment of Section 202 Direct Loans.
PROGRAM FEATURES
- Maximum loan to value is 90%; maximum term is 35 years with full amortization.
- Loan is pre-payable, assumable and non-recourse.
- Requires a 1.11x debt service coverage based on a maximum of 95% occupancy.
- Underwriting based on Section 8 contract rents even if higher than market rents.
- Loans funded with tax-exempt bonds or Government National Mortgage Association (GNMA) Securities.
- Repairs may not cost in excess of 15% of the project’s replacement cost or involve replacement of 2 or more major building components.
- Costs of repairs and reserve fund for building/equipment replacement can be included in the loan.
- Loan can include a Development Fee equal to 15% of repairs.
FEES
0.3% Application Fee to FHA
1.0% Mortgage Insurance Premium (up-front at closing)
1.0% Inspection Fee on Repair Amount
2.0% Maximum Financing Fee
1.5% Maximum Placement Fee
2.0% Costs of Issuance for Tax-Exempt Bond Transactions
An annual 0.45% Mortgage Insurance Premium payable to FHA is required. For Multifamily Accelerated Processing (MAP), additional fees will be required for third party appraisals, environmental reports and building inspection and engineering reports which may be paid from existing reserve funds.
ESCROWS
- Full escrows required for property insurance, real estate taxes, and FHA mortgage insurance premium.
- Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan.
