Multifamily
HUD 221(d)(4)
HUD 221(d)(4) is an FHA mortgage insurance program for the new construction or substantial rehabilitation of multifamily rental housing. A single HUD-insured loan funds construction and then converts to a long-term, fixed-rate, fully amortizing, non-recourse mortgage.
Key facts
Figures as of 2026-10-31. Program rules change by notice, so an advisor confirms current terms with lenders before you rely on any figure.
| Item | Figure | Source and date |
|---|---|---|
| Term | Construction period plus 40-year fixed | HUD Mortgagee Letter 2025-03 (Jan 2025); as of 2026-10-31 |
| Market-rate: max loan-to-cost / min DSCR | 87% / 1.15x | HUD Mortgagee Letter 2025-03 (Jan 2025); as of 2026-10-31 |
| Affordable or rental assistance: max loan-to-cost / min DSCR | 90% / 1.11x | HUD Mortgagee Letter 2025-03 (Jan 2025); as of 2026-10-31 |
| Annual MIP (flat, all FHA multifamily) | 0.25% for applications on or after 2025-10-01 | Federal Register 2025-18379 (Sept 23, 2025); as of 2026-10-31 |
| Upfront premium (modeled) | 0.25% | Secondary source; confirm with a HUD lender; as of 2026-10-31 |
| Annual CPA audit | About $20,000 per year | Corin sizing estimate; as of 2026-10-31 |
How 221(d)(4) works
Instead of a construction loan followed by a separate permanent loan, HUD insures one loan that covers both phases. The borrower avoids refinancing risk at completion and locks a long fixed term from the start. Draw administration during construction is handled by the HUD lender and HUD; Corin has no role in construction draws.
The trade-off is process. HUD underwriting, Davis-Bacon wage requirements, a longer pre-construction timeline and the borrower's sponsor, contractor and architect qualifications all shape feasibility.
Costs and mortgage insurance
HUD multifamily now carries a single flat annual mortgage insurance premium of 0.25%. Green, affordable and market-rate MIP tiers no longer apply, so green certification no longer lowers MIP. Other costs include the HUD application fee (0.3%), the lender financing fee, third-party reports and legal.
Frequently asked questions
What leverage does HUD 221(d)(4) allow?
Under HUD Mortgagee Letter 2025-03 (Jan 2025; figures as of 2026-10-31), market-rate projects size to 87% of cost at 1.15x DSCR, and affordable or rental-assistance projects to 90% at 1.11x. Confirm with a HUD lender.
Is 221(d)(4) recourse?
It is non-recourse to the borrower except for customary carve-outs. During construction, HUD typically requires completion assurances from the sponsor and contractor.
How does 221(d)(4) compare with a bank construction loan?
HUD offers higher leverage, a fixed rate and no refinancing at completion, but takes longer and requires more process. A bank loan closes faster and can be more flexible, with shorter terms and recourse.
Related programs
- HUD 223(f) multifamilyLong-term, fixed-rate, non-recourse refinance for existing apartment communities.
- HUD 223(a)(7)Streamlined refinance of an existing HUD-insured multifamily loan.
- Construction-to-permanent loansOne loan that funds construction and converts to long-term debt.
- Construction loansGround-up and heavy-renovation financing from banks, debt funds and private lenders.
- Multifamily financingHUD, agency, bridge and DSCR options for apartment owners.
Talk through your deal with an advisor
Send the basics and a licensed Corin advisor reviews which programs and lenders may fit, or size the loan yourself first.