HUD Loan Programs: Consistency in an Unpredictable Market

June 6, 2023

HUD Loan Programs: Consistency in an Unpredictable Market

June 6, 2023

Berkadia FHA/HUD continues to guide clients through the complexities of today’s market amid record high rates and economic turbulence. Our dedicated HUD professionals, including some of the industry’s top FHA experts, are skilled at navigating the lending process on behalf of our clients.


  • Maximum 85 percent LTV (80 percent for cash out), 1.17X DSC
  • Non-recourse and fully amortizing loan
  • Simple prepayment structure (ten, nine, eight percent, etc.) no defeasance or yield maintenance
  • Rate reduction after closing via loan modification or 223(a)(7) streamlined refinance

Investors oftentimes find it challenging to navigate a high interest rate environment. However, an FHA-insured loan provides flexibility, allowing borrowers to create significant cost savings for themselves. The HUD Interest Rate Reduction (IRR) program allows borrowers the opportunity to lower their interest rate during more advantageous times. This option remains in effect throughout the loan term.

Possibly the most important feature of an FHA-insured loan is full-term amortization. This feature allows a borrower to do nothing when rates are elevated. The FHA loan continues to amortize over the original 35-year term for a 223(f) and 40-year term for a 221(d)(4) at the new low rate. With these loans, borrowers can wait to take advantage of a lower rate environment, unlike a conventional loan which commits a borrower at the higher rate throughout its entire term.


Below is an outline of HUD loan programs and their key features. HUD is processing applications immediately with early rate lock options available. For eligible acquisition transactions, Berkadia may also provide bridge-to-HUD financing.

221(d)(4) and 220: New construction and substantial rehabilitation

  • High leverage construction/permanent financing
  • Permanent interest rate locked prior to construction
  • Interest rate modification program available post completion

Learn more.

223(f): Refinance or acquisition

  • 35-year fixed-rate financing
  • Ability to modify interest rate during term
  • High leverage permanent financing

Learn more.

241(a): Finance repairs, additions, and improvements to existing FHA-insured properties

  • Davis-Bacon Act not required when first mortgage is a 223(f)
  • Allows additional units to be built on contiguous sites

Learn more.

223(a)(7): Simplified refinance of existing FHA-insured properties

  • Streamlined refinance program for already insured loans
  • No out-of-pocket costs
  • Borrow back to original loan amount

Learn more.

IRR: Interest Rate Reduction Loan Modification

  • Interest rate lowered to current market conditions
  • No additional loan dollars beyond existing debt
  • The only out of pocket cost is borrower legal
  • There is $0 finance fee and $0 application fee required

Learn more.


Empowered by industry-leading technology and data-driven insights, our Berkadia FHA/HUD advisors are more flexible, creative, and innovative with every deal. As a leader in the HUD sector, we have the vision and versatility to create customized debt financing and equity solutions that best align with our clients’ specific needs. To learn more, contact your local FHA/HUD representative.

-Chad Bedwell, Managing Director

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