The HUD 223(a)(7) loan program offers many benefits, including:

• Extending the original loan term and reducing the current interest rate.
• Financing up to 100% of eligible costs.
• No new appraisals, market studies, or environmental reviews required.
• Fewer fees and a lower overall cost.
• Non-recourse and fully assumable.
• A streamlined application process.

For more information, please visit this page and this page.

HUD 223(a)(7) loans have terms including:

• Loan Size: Loans are allowed up to 100% of the eligible transaction costs, including:
  • Existing debt principal
  • Eligible repairs
  • Initial replacement reserves
  • Prepayment penalties
  • Third-party reports (the only one required is a project capital needs assessment, or PNCA)
• Loan Term: May be increased up to 12 years, as long as the new loan doesn't have a term greater than 40 years (for HUD 221(d)(4) loans and HUD 232 loans) or 35 years (for HUD 223(f) and HUD 232/223(f) loans)
• DSCR:
  • Non-profit entities: 1.05x minimum Debt Service Coverage Ratio (DSCR)
  • For-profit entities: 1.11x minimum DSCR

Eligible Properties for HUD 223(a)(7) Loans: Multifamily and healthcare properties with existing HUD-insured debt are eligible for the HUD 223(a)(7) refinance loan program.

HUD 223(a)(7) loans have terms including:

• Loan Size: Loans are allowed up to 100% of the eligible transaction costs, including:
  • Existing debt principal
  • Eligible repairs
  • Initial replacement reserves
  • Prepayment penalties
  • Third-party reports (the only one required is a project capital needs assessment, or PNCA)
• Loan Term: May be increased up to 12 years, as long as the new loan doesn't have a term greater than 40 years (for HUD 221(d)(4) loans and HUD 232 loans) or 35 years (for HUD 223(f) and HUD 232/223(f) loans)
• DSCR:
  • Non-profit entities: 1.05x minimum DSCR
  • For-profit entities: 1.11x minimum DSCR

For more information, please refer to our easy-to-understand HUD 223(a)(7 loan term sheet.

Multifamily and healthcare properties with existing HUD-insured debt are eligible for the HUD 223(a)(7) refinance loan program.

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

The maximum loan amount for a HUD 223(a)(7) loan is 100% of eligible refinancing costs, including the principal amount of existing debt, fees, repairs, third-party costs, and initial reserve deposits. A minimum debt service coverage ratio (DSCR) is required - 1.11x for for-profit borrowers or 1.05x for non-profit borrowers. Source and Source.

Yes, HUD 223(a)(7) loans typically allow prepayment. However, there is often a 0-2 year lockout period, during which the loan cannot be prepaid at all, followed by an 8-10% declining prepayment penalty. This means that the prepayment penalty will decline by 1% each year, starting after the lockout period ends.

For instance, if a loan had a 1-year lockout period, followed by an 8% declining prepayment penalty, and a borrower wanted to pay off the loan after the first year, they would need to pay a penalty of 8% of the remaining loan. However, if they waited until after the fourth year, they would only need to pay 5% of the remaining loan amount. After the ninth year, there would be no penalty to prepay the loan.