What is Leverage?

Leverage Definition

Leverage refers to the amount of debt used to finance an asset. Basically, it is the act of financing assets with borrowed money. When using leverage, the asset is collateral for the purchase. In general, lenders limit the amount of leverage borrowers can use. HUD multifamily loan leverage is typically limited by LTV, or loan-to-value ratio. While, the HUD 223(a)(7) loan is not limited by a specific LTV, 223(a)(7) loans cannot exceed 100% of eligible refinancing costs. These include the existing loan balance, plus fees, repairs, third-party costs, and initial replacement reserves.

To learn more about the HUD 223a7 refinance program, fill out the form below to speak to a HUD/FHA loan expert.