80% or greater for apartment building loans

80% Or Greater For Apartment building:

HUD loans can be used for a variety of financing options. In particular, HUD loans are called upon when we receive a number of inquiries for apartment loans in excess of 80%. Which HUD loans? Non-Recourse, HUD 223(f). Loan terms as long as 35-years for an existing property are available (construction period, plus 40-years for construction). HUD has advance rates of 80% or greater for apartment building loans starting at $1,000,000.  However, due to the higher closing costs we don’t generally recommend moving forward unless the loan amount is over $5 million.

One of the pitfalls of these HUD loans you should be aware of  is the long lead time necessary to close.  We work with the originators of HUD loans that partner with short-term bridge lenders that will allow you to close the loan on a temporary basis while finalizing the application of HUD loans.  Therefore, you could close on an acquisition and roll the short term loan into the HUD loan when the HUD loan clsoes.

Call or email Mike Caffrey (913) 402-7077 [email: mike@caffreyloans.com] for additional details and requirements for these loans.

Program Overview

The HUD loans 223(f) program is a financing program designed for acquisitions or refinancing of existing multifamily properties.  The program can be used to finance repairs or for equity take-outs.


  • Single-purpose entities that can either be profit or non-profit motivated.  In other words you can have an ownership entity in a LLC, corporation, or a partnership.  Above all you should make sure the entity does not have other assets or liabilities not related to the subject property.

Personal Liability:

  • None.  HUD loans are non-recourse. Of course these do have provisions for bad-boy carve outs.  For example the lender can come back after you as a principal in the case of fraud.

Loan Amount:

  • You will not see a maximum HUD loans unless limited by statutory caps.  Economically we recommend loans starting at $5 million and above.


  • HUD offers 35 year term. If you have a new construction project loan terms can be for the construction time period, plus 40-years.


  • HUD loans are fully amortized.  Therefore, you do not have a balloon balance.


  • 83.3%, 87% or 90% of the project’s value for market rate, qualified affordable or qualified rental assistance properties, respectively. As you can see 80% or greater for apartment building loans are available.

Cash Out Feature:

  • Cash out up to 80% loan to value.  As a result HUD will allow you to recapture some of the trapped equity.

Interest Rates:


  • HUD loans are fully assumable.  HUD will have the final approval.  New principals must be approved by the lender just as the lender approved for you.


  • Terms are negotiable with no yield maintenance or achievement clauses.  Standard provisions include a short lockout period followed by a declining prepayment penalty computed as a percentage of the loan until reaching 0% after ten years.  You do have some flexibility to adjust the prepayment penalty at the time of the initial application. For instance a lower or reduced prepayment penalty term HUD will increase the rate slightly.

Mortgage Insurance:

  • You will be charged a mortgage insurance premium which is to be paid annually based on the outstanding principal loan balance. The initial premium is 1% for the first year and ranges between .45% and .60% in subsequent years depending on the project.  If you have an Energy Effective properties this is reduced to .25%.

Commercial Space:

You may have Commercial space may be up to 20% of the project’s net rentable area and 20% of the project’s effective gross income.  Therefore, you can have a mixed use property.  As you can see there is a limitation on the non-apartment income.

HUD loans area a great way to finance your property. It is best to align yourself with an expert. At Caffrey & Co. we hope to make that process easier and reach your goal of securing these loans.