2021 Sample Terms For HUD 241(a) Loans

Size: HUD 241(a) loans are limited by the smallest of the three options below:

• For-profits: 90% of the value of a new construction project, Non-profits: 95% of the value of a new construction project
• The maximum insurable amount of the project, as calculated by the FHA
• 90% of the property's net operating income (NOI), including payments for the original loan

Term: Term must be identical to the current loan; however, if there are less than 25 years left on that loan, the HUD 241(a) loan term can be expanded to 40 years

Amortization: Up to 40 years, fully amortizing

Minimum DSCR: 1.11x

Advantages:

• Highly competitive, fixed interest rates
• Loans are fully assumable (with FHA approval)
• HUD 241(a) loans are non-recourse

Disadvantages:

• Requires a variety of third-party reports, including environmental assessments, architectural and engineering reports, and full HUD/FHA appraisals
• Requires an FHA application fee of 0.30% of the loan amount and a 0.50% FHA inspection fee
• Requires a one-time mortgage insurance premium (MIP) at closing, and payment of monthly MIPs throughout the duration of the loan

In this article:

1. Supplemental Financing for Current HUD Multifamily Borrowers
2. 2021 Sample Terms For HUD 241(a) Loans
3. Get Financing