FHA®223(f)
Refinance of HUD Section 202 Properties
Arbor provides FHA-insured, long-term, fixed-rate financing for refinance or moderate renovation of existing Section 202 projects nationwide. Arbor uses the single-stage Multifamily Accelerated Processing (MAP) program to expedite underwriting and approval.
| Loan Term & Amortization | Up to 35 years (fully amortizing) |
| Minimum DSCR | 1.11x |
| Maximum LTV/Purchase Price | Up to 90% |
| Fixed Rate | Yes |
| Eligible Properties | Existing Section 202 projects |
| Eligible Borrower | Single asset entity (for profit or nonprofit) |
| Developer Fee | Up to 15% of the acceptable development cost |
| Tax & Insurance Escrows | Monthly deposits required |
| Recourse | Nonrecourse, subject to HUD Regulatory Agreement |
| Commercial Space | Maximum 25% of net rentable area and maximum 20% of effective gross income; 10% vacancy applied |
| Required Reports | Appraisal, Project Capital Needs Assessment (PCNA) & Phase I Environmental |
| Prepayment | Negotiable; generally two-year lockout with a 10% to 1% declining prepayment penalty; other prepayment options available |
| Assumable | Subject to Arbor and HUD approval and payment of assumption fee |
| Good Faith Deposit | Based on project type and loan size |
| Expense Escrow | Yes – sufficient to cover Arbor’s expenses and third-party report costs |
| Origination Fee | Negotiable |
| HUD Application Fee | Nonrefundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD upon application submission |
| HUD Inspection Fee | $30 per unit when repairs are less than $3,000 per unit; if above $3,000 per unit, 1% of the total cost of the repairs |
| Legal/Closing Fee | Borrower pays Arbor’s counsel fee and miscellaneous closing costs |
| Rehabilitation Qualifications | Repairs cannot exceed $15,000 per unit (adjusted for local high-cost factor); repairs/replacements are also limited to one major building component |
| Davis Bacon | Not applicable to this program |
| HUD Mortgage Insurance Premium (MIP) | HUD sets the cost of the FHA insurance; initial MIP is due to HUD at closing, and the MIP is escrowed monthly thereafter |
| Prepayment of Section 202 Loan | HUD’s Housing Notice 2013-17 provides guidance for the prepayment approval process |
| HUD Mortgage Insurance Premium | HUD sets the cost of the FHA insurance; initial MIP is 1% of the loan amount due to HUD at closing. Annual MIP rates:
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