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Arbor provides FHA-insured, long-term, fixed-rate financing for new construction or substantial rehabilitation of multifamily projects nationwide. Applications typically processed as a 2-stage application (Preliminary Application followed by Firm Application). HUD-experienced development teams may request “straight to Firm” application, saving significant time by eliminating the Preliminary Application stage.

Loan Term & Amortization Actual construction period plus 40 years (fully amortizing with interest only payable during construction period). Term not to exceed 75% of economic life.
Maximum Loan Amount Will be the lesser of:

  1. 85% of total eligible development costs (87% for affordable) (90% for 90% project-based rental assistance), replacement cost includes value of land for new construction and as-is value of property for substantial rehabilitation
  2. FHA mortgage statutory per unit limits adjusted for local high cost factor, or
  3. An amount that achieves a minimum debt service coverage, as follows: a) 1.176x DSC for market rate properties b) 1.15x DSC for affordable transactions; and c) 1.11x DSC for projects with 90% or greater rental assistance
Eligible Properties New construction or substantial rehabilitation for age-restricted properties (tenants limited to 62 years and over).
Eligible Borrowers Single Asset Entity (for profit or non-profit).
Occupancy Requirement
  • Maximum economic occupancy of 93% for market rate properties
  • 95% for LIHTC properties having at least 80% LIHTC set aside, and rents at least 10% below markets
  • 97% for properties with at least 90% rental assistance contracts (or 90% LIHTC set aside) with rents at least 10% below market
Tax & Insurance Escrows Monthly deposits required.
Recourse Non-recourse – Construction and Permanent.
Commercial Space Maximum 10% of gross floor area and maximum 15% of potential gross income.
Required Reports Market Study, Appraisal, Architect/Cost Review and Phase I Environmental. CPA reviewed financial or last fiscal year – sub rehab.
Prepayment Negotiable. Generally two-year lockout with a 10% to 1% declining pre-payment penalty. Other pre-payment options available.
Assumable Subject to Arbor and HUD approval and payment of assumption fee.
Good Faith Deposit Negotiable based on project type.
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs.
Origination Fee Negotiable
HUD Application Fee Non-refundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD with the firm commitment submission package. For market rate pre-applications, a non-refundable review fee of 15 bps (50% of the firm commitment application fee) is due to HUD with the submission of the pre-application package.
HUD Inspection Fee 0.5% of the mortgage amount for new construction. 0.5% of the cost of the repairs for substantial rehab.
Legal/Closing Fee Borrower pays Arbor’s counsel fee and miscellaneous closing costs.
Rehabilitation Qualifications Repairs must exceed $15,000 per unit (adjusted for local high cost factor) or replacement of 2 or more major building systems.
Davis Bacon Davis Bacon labor standards and wage requirements apply to construction and rehab work.
HUD Mortgage Insurance Premium Annual MIP Rates:

  • Market Rate Properties: 0.65%
  • Affordable Properties: 0.35%
  • Broadly Affordable or Energy Efficient Properties: 0.25%


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