Berkadia | FHA/HUD 231 Loan Program

HUD 231 Loan Program

• For independent living projects reserved for tenants 62 and over

• Also for tenants with physical or mental impairment that substantially limits major life activities

• No mandatory services or meal program allowed

• Units must be designed for and marketed to the elderly and/or disabled

• Maximum 85% loan-to-cost

Market Rate Properties

Affordable Properties (LIHTC Minimums)

Rent Assisted Properties (Section 8)

Interest Rate & Term

Prepayment

• 1.176x DSCR with 7% vacancy

• Statutory mortgage limitation (per unit)

• Maximum 87% loan-to-cost

• 1.15x DSCR with 5% vacancy

• Statutory mortgage limitation (per unit)

• Maximum 90% loan-to-cost

• 1.11x DSCR with 5% vacancy

• Statutory mortgage limitation (per unit)

• Fixed interest, same rate for construction and permanent phases

• Construction phase + 40-year permanent amortization

• Interest only during construction

• Fully amortizing

• Conversion to permanent phase at construction completion (no DSCR test for conversion)

• Interest rate modification program available post completion

• Flexible 10 year prepayment structure

Additional Requirements

Application Timeline

Market Rate (Two-Stage Processing)

Affordable/Rent Assisted (Single-Stage Processing)

• Davis-Bacon Act prevailing wages apply

• New Construction Escrows: (1) Working Capital: 4% of loan amount (2) Operating Deficit Escrow: 16-20 months of Debt Service

• Substantial Rehab Escrows: (1) Working Capital: 2% of loan amount

Waivable for certain Rent Assisted or LIHTC properties.

• Cost certification required for market rate properties

• Limits on commercial income and space apply; 20% minimum vacancy

• 30 days: Concept submission and meeting with HUD

• 45 – 60 days: Pre-application underwriting by Berkadia (app, mkt study, phase I)

• 45 – 60 days: HUD pre-application review

• 45 – 60 days: Firm application underwriting by Berkadia (100% plans/specs)

• 45 – 60 days: HUD firm application review

• 45 – 60 days: Rate lock and closing

• 45 – 60 days: Firm application underwriting by Berkadia

• 45 – 60 days: HUD firm application review

• 45 – 60 days: Rate lock and closing