HUD 241(a) Supplemental Financing

Supplemental Financing for Current HUD Multifamily Borrowers

For borrowers who already have a HUD multifamily loan, and are looking to make improvements on their property, the HUD 241(a) Supplemental Loan is one of the better options available, if not the best. HUD 241(a) supplemental loans were specifically designed for HUD borrowers who need extra funding to upgrade an existing property. Funds from the HUD 241(a) supplemental financing program can be used for expanding buildings, increasing a property’s energy efficiency, or even buying new safety equipment. Like many HUD financing options, the 241(a) loan is fully assumable (with HUD approval) and non-recourse.

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

MinimumDSCR: 1.11x


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


  • 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