223(f) – Apartments Refinance or Purchase

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ELIGIBLE PROPERTIES:
Apartment properties which are at least 3 years old from the date of initial occupancy. Moderate rehabilitation is permitted.

LOAN TYPE:
Permanent loan.

MAXIMUM LOAN:
The lesser of the following criteria:
85% of FHA appraised value;
1.17 debt service coverage;
Statutory unit mortgage limits.
Refinance Transaction:
The greater of: (a) the cost to refinance; or (b) 80% of value.
Purchase Transaction:
85% of the cost of acquisition.
Note: No change in mortgage criteria for non-profit ownership.

INTEREST RATES:
Fixed rate determined by market rates at the time of rate lock.

AMORTIZATION:
Up to 35-year, fully amortizing loan.

PERSONAL RECOURSE:
Non-recourse.

ASSUMABILITY:
Assumable, subject to Walker Dunlop approval.

SUBORDINATE FINANCING:
Allowable, subject to FHA criteria.

PREPAYMENT:
Negotiable.

REPAIRS:
Repair program may not exceed the greater of 15% of the value after repairs, or $6,500 plus applicable high cost percentage per unit.
No more than one major building system can be replaced.

WAGE REQUIREMENTS:
Davis-Bacon prevailing wage laws do not apply.

ANNUAL MORTGAGE INSURANCE PREMIUM:
1.0% of the mortgage amount is payable at closing. Thereafter, the MIP is escrowed monthly based on a rate established by FHA. The rate is fixed at loan endorsement.

ESCROWS:
Monthly escrows for property insurance, real estate taxes, reserves for replacement (as determined by FHA) and mortgage insurance premiums.
An initial deposit to replacement reserve and 100% of repair costs (both as determined by FHA) are escrowed from mortgage proceeds.

COMMERCIAL SPACE:
Commercial area shall not exceed 20% of the total net rentable area of the project and commercial income shall not exceed 20% of effective gross income.

ENVIRONMENTAL ISSUES:
Special rules apply for properties which are located in Flood Hazard Zones as designated by FEMA.
Lead-based paint and asbestos must be abated in accordance with FHA requirements.

APPLICATION FEE:
A non-refundable fee of 0.3% of the requested mortgage amount is payable to FHA at the time of application, plus estimated underwriting costs for market study, appraisal, architectural/engineering report, cost analysis, environmental assessment and other loan processing costs.

FINANCING AND PLACEMENT FEES:
Negotiable.

CLOSING EXPENSES:
Standard transaction costs, including legal fees, title insurance and survey.

OTHER FHA REQUIREMENTS:
Cash escrows or letters of credit are required for the following:
20% of repair costs as a completion guarantee.
2.5% of repair costs as a latent defects guarantee, due at completion of repairs.
Forecasted operating deficits, (maximum of 18 months) to be released upon achievement of breakeven operations for 90 days.

FHA PROCESSING TIME:
One stage for FHA Multifamily Accelerated Processing (MAP) Procedures:
Firm Commitment Stage: 60 days for review.

PRELIMNARY SUBMISSION PACKAGE:
Include the following in your request for a loan quote:

  • Property description and location map.
  • Number of units with breakdown of proposed rents by unit type.
  • Current rent roll and year-to-date operating statement.
  • Operating history – prior 3 years, if available.
  • Current year operating budget.
  • Existing debt and purchase price.
  • Sponsor resume.

This is a summary of general program terms, which are subject to change. This is not a commitment to lend.