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NEW
CONSTRUCTIONS & SUBSTANTIAL RENOVATION
LOANS FOR
MULTIFAMILY APARTMENTS
FHA SECTION 221(d)(4)
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| Eligible
Projects: |
Proposed
new construction (or) acquisition or refinance and substantial renovation
of market rate and/or affordable rental housing Nationwide. AMERICAN
MORTGAGE prefers to work on developments of 100 units or larger, however,
will consider smaller projects on a case by case basis. Existing projects
involving renovation work must, at a minimum, meet one or more of the
following to qualify:
-
Replacement of at least two major building components (i.e.) roof,
HVAC system,
new windows, etc., or
- The
renovation must meet or exceed 15% of HUD's estimated replacement
cost of the project after the work is in place, or
- The
renovation work must meet or exceed $6,500 per unit times HUD's
high cost factor for the area.
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| Commercial
Space: |
| Commercial
space is allowable, however, is limited to 10% of the gross floor
area and 15% of gross income.
|
| Geographic
Preference: |
| Nationwide
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| Mortgage
Amount: |
| up to
$100,000,000
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| Loan
Features: |
- New
Construction, or Substantial renovation of existing multifamily
apartments
- Construction
loan term as needed, plus up to 40 year permanent loan term
- Up
to 90% loan-to-value ratio (98.6% on BSPRA Projects)
- Minimum
Debt Service Coverage 1.11% (90% of NOI)
- Fully
amortizing
- Fully
assumable
- Low,
fixed interest rates
- Non-recourse
- No
rent control restrictions
- No
limitation on owner’s return
- Combined
construction / permanent loan
- Construction
loan term as needed
- Up
to 40 year permanent loan term
- Up
to 90% loan-to-value ratio
- Pre-payable
with restrictions
-
Mortgage
proceeds may be used to pay for acquisition or refinancing costs,
including the cost of repairs, or construction, financing costs,
and construction loan real estate taxes, insurance and interest.
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| Prevailing
Wage
Requirements: |
| The
payment of prevailing wages is required pursuant to the Davis-Bacon
Wage Act.
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| BSPRA: |
| A
Builder's and Sponsor's Profit and Risk Allowance (“BSPRA”)
is includable in the mortgage and may be used as a credit against
required equity if there is an identity of interest between the borrower
and the general contractor. BSPRA may be a maximum of 10% of total
project costs, excluding land costs, contingency, and initial deposit
to replacement reserve. By using BSPRA, a developer can substantially
reduce the equity requirement. BSPRA is taken in lieu of the general
contractor's profit.
|
| Secondary
Financing: |
| Secondary
financing is not permitted by HUD. However, mezzanine financing is
allowed.
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| Prepayment/Lockout: |
Negotiable.
Typically locked out during construction, then ranging from a five-year
lockout to a ten-year lockout during the permanent loan, with or
without
a declining
prepayment
penalty in the five years beyond
the
lockout
period of 5%, 4%, 3%, 2%, 1%, 0%. The note interest rate will
be adjusted according to the selected lockout/prepayment terms.
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