Is a federal mortgage insured program. It doesn't mean that the government is funding the loan...they are insuring it against default. Section 221(d) is a section under the Federal National Housing Act. It allows the FHA (Federal Housing Administration) to provide mortgages insurance to HUD approved lenders. This is to assist in the development or substantial rehabilitation of apartment or other types of multifamily rental properties. The loan program allows for long-term mortgages (up to 40 years) that can be financed with Government National Mortgage Association (GNMA) Mortgage Backed Securities.
This is the best loan program in the marketplace today. Multifamily Developers are often amazed at the benefits this program offers them.
The program is available for both non-profit and for-profit borrowers. Under Section 221(d)(3), non-profit borrowers can receive an insured mortgage up to 100% of the estimated replacement cost of the project. Under section 221(d)(4), for-profit borrowers can receive a maximum mortgage of 90% the replacement cost estimate.
Most people mistakenly believe that this program is only for low income tenants...there is NO income limits. The properties can be market rate, LIHTC (low income housing tax credits), and bond properties. The properties can also be specifically used for senior or handicap tenants.
The property has to have at least 5 units and it can either be detached, semi-detached, row, walkup, or elevator style. Non-apartment property types are also eligible for this program such as mobile home parks and assisted living facilities. The properties can also have limited commercial/retail space.