U.S. Department of Housing & Urban Development (HUD) announced the first increase of its Large Loan threshold for multifamily properties to $120 million, up from $75 million since the policy was first rolled out in 2014. Large Loans are subject to stricter underwriting parameters, which you can read more about in our HUD 221(d)(4) and 223(f) loan program overviews.

HUD insured loan programs offer long term, low interest rate financing for new construction and permanent financing for qualifying affordable housing and market rate apartment projects.  The popular Section 221(d)(4) and 223(f) multifamily loan programs offer loan amounts up to 85%-90% LTV / LTC (80% for cash-out refinances) supported by a 1.176x – 1.11x DSCR.  However, loan proceeds available under these programs for Large Loans are reduced to 75%-87% LTV / LTC (70% LTV for cash-out). HUD's policy to limit loan proceeds and impose additional risk mitigation requirements for Large Loans reduces the risk to the FHA insurance fund, while making such loans less attractive to borrowers, by design. This Large Loan policy update reflects HUD's increased appetite for loans in the $75 million to $120 million range. "HUD’s risk analysis and industry feedback showed this revision was prudent to revise upward, primarily due to cost increases of housing and construction over the last decade, without providing undue risk to the FHA insurance fund," notes HUD in its formal published Mortgagee Letter 2023-14: Revisions to Large Loan Risk Mitigation MAP Guide Policies.

Additional details are provided by HUD in its formal published notice linked to above. Contact Us for more information and to learn more about HUD loan programs. 

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