HUD FHA 232/223(f) Transaction FAQs

For REFINANCING, the lesser of:

• 80% of fair market value (85% for non-profits)
• 100% of FHA’s allowable transaction costs (no equity take-out)
• 100% of FHA’s allowable costs less grants, public loans, and tax credits
• Amount that results in a debt service coverage ratio of 1.45x based on the underwritten Net Operating Income

For ACQUISITION, the lesser of:

• 85% of FHA’s allowable acquisition costs (90% for non-profits)
• 100% of FHA’s allowable costs less grants, public loans, and tax credits
• 80% of fair market value (85% for non-profits)
• Amount that results in a debt service coverage ratio of 1.45x based on the underwritten Net Operating Income

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Yes. Annual deposits are required based on estimates determined by a third-party Project Capital Needs Assessment. An initial deposit to the replacement reserve will be required at closing and can be funded by the mortgage loan.

Secondary financing is allowed in the form of a surplus cash note. Combined loan to value cannot exceed 92.5% unless secondary financing is from a governmental source.

Up to 15% of the appraised value of the property after completion of repairs, as long as no more than one building system is substantially renovated or replaced.

The maximum loan term is 35 years or 75% of the remaining economic life of the property.

• Appraisal
• Phase I Environmental report
• Project Capital Needs Assessment (PCNA)