An interest-only fixed-rate loan is a mortgage in which a borrower pays only interest and nothing towards the mortgage principal. Interest-only fixed-rate loans are only offered by two HUD multifamily loan programs, the HUD 221(d)(4) program, and the HUD 232 program. In both cases, these loans are offered for up to 3-year periods during the construction phase of a project.

In relation to HUD 232 Financing, an interest-only fixed-rate loan is one in which a borrower pays only interest at a fixed rate and nothing towards the principal of their mortgage loan. HUD 232 loans for construction and substantial rehabilitation are interest-only fixed-rate loans during the specified construction period.

Interest-only fixed-rate loans offer several advantages, including:

• The ability to pay only interest during the construction period, which can help to conserve cash flow.
• The ability to lock in a fixed rate for the entire construction period.
• The ability to pay off the loan in full at the end of the construction period.

These advantages make interest-only fixed-rate loans an attractive option for borrowers looking to finance the construction of a HUD 232 project. For more information, please see What is an Interest-Only Fixed-Rate Loan? and Interest-Only Fixed-Rate Loans in Relation to HUD 232 Financing.

The main disadvantage of an interest-only fixed-rate loan is that when the amortization period of the loan begins, the loan payments get significantly larger than if it had been amortizing from the start. Additionally, since a borrower won't have built up any equity in their property during the interest-only period, if property values go down, they could easily find themselves underwater on their mortgage (owing more than the property is worth).

Source: What is an Interest-Only Fixed-Rate Loan? and Interest-Only Loans in Commercial Real Estate

An interest-only fixed-rate loan is a mortgage in which a borrower pays only interest and nothing towards the mortgage principal. This type of loan is only offered by two HUD multifamily loan programs, the HUD 221(d)(4) program, and the HUD 232 program. During the construction phase of a project, these loans are offered for up to 3-year periods. With a HUD 232 loan, the borrower pays only interest at a fixed rate and nothing towards the principal of their mortgage loan.

In order to be eligible for an interest-only fixed-rate loan, you must meet the eligibility requirements of the HUD 221(d)(4) or HUD 232 loan programs. These requirements include:

• The property must be a multifamily residential property.
• The property must be located in an area that is eligible for HUD financing.
• The borrower must have a satisfactory credit history.
• The borrower must have sufficient cash flow to cover the loan payments.
• The borrower must have sufficient equity in the property.

For more information on the eligibility requirements for HUD 221(d)(4) and HUD 232 loans, please visit https://hud221d4.loan/eligibility-requirements/ and https://hud232.loan/eligibility-requirements/ respectively.

The repayment options for an interest-only fixed-rate loan depend on the loan program. According to HUD223a7.loan, interest-only fixed-rate loans are only offered by two HUD multifamily loan programs, the HUD 221(d)(4) program and the HUD 232 program. In both cases, these loans are offered for up to 3-year periods during the construction phase of a project.

According to HUD232.loan, an interest-only fixed-rate loan is one in which a borrower pays only interest at a fixed rate and nothing towards the principal of their mortgage loan. HUD 232 loans for construction and substantial rehabilitation are interest-only fixed-rate loans during the specified construction period.

At the end of the construction period, the borrower must begin to pay both principal and interest on the loan. The repayment terms of the loan will depend on the loan program and the terms of the loan agreement.