Market rate property of any class, cooperatives, affordable housing or subsidized.
Limited to 10% of gross floor area and 15% of gross income (limits double in certain urban renewal areas under Section 220).
New construction or substantial rehabilitation which is defined as:
· Cost of improvements mor than higher of:
o Base cost per dwelling unit limit times the applicable high cost factor times the number of dwelling units proposed for the property after completion of any construction, or
o $15,000 per unit adjusted for local high cost factor
· Replacement of two or more major building components
Payment of prevailing wages is required by HUD. Wages are determined by the Department of Labor.
Single asset, special purpose entity either for profit or non-profit
Non-recourse
Fixed for term of the loan, determined by market conditions at the time of rate lock
Maximum loan amount will be the lesser of:
Property Max Min
Type LTV DSCR
Subsidized1 90% 1.11x
Affordable2. 87% 1.15x
Market Rate3 85% 1.17x
1At Least 90% of the units covered by project-based Section 8 contract.
2Regulatory Agreement with a minimum set -aside (e.g., 40% of units at 60% AMI or 20% of units at 50% AMI) in effect for at least 15 years after the new loan closes. Achievable tax credit rents 10% or more below market.
3Market rate projects with significant rent advantage (achievable tax credit rents 10% or more below market).
Actual construction period plus 40 years (fully amortizing with interest only payment during construction period)
Negotiable. Standard is a 10-year stepdown prepayment (10% year 1 declining 1% annually until open at Par after year 10). Loan is fully assumable subject to HUD approval.
Replacement reserves required and monthly deposit is to be determined in accordance with HUD guidelines.
Taxes and insurance are escrowed monthly (post construction)
Working Capital Reserve equal to 4% of loan amount (cash or LOC)
Operating Deficit Reserve equal to 3% of loan amount, or greater as determined by HUD at commitment (cash or LOC)
Market Rate: 0.60% due to HUD at closing and 0.65% annually thereafter.
Broadly Affordable: 0.25% due to HUD at closing and 0.25% annually thereafter.
Green and energy efficient housing: 0.25% due to HUD at closing and 0.25% annually thereafter.
Affordable: 0.35% due to HUD at closing and 0.35% annually thereafter.
Section 220 urban renewal projects that are not Section 8 or LIHTC: 0.70% annually.
*All MIP rates are escrowed monthly.
30 basis points ($3 per $1,000) on requested loan amount (15 bp due with submission of initial application and 15bp due with submission of firm application to HUD).
Appraisal, Market Study, Phase I , Construction Cost and Architectural-Environmental Review.
BMCHA 221(d)(4) Term Sheet (pdf)
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