HUD 223(a)(7) Mortgage Terms and Interest Rates
Maximum Loan Amount
The maximum loan amount for HUD 223(a)(7) refinancing of existing FHA-insured multifamily or healthcare loans can only cover:
The existing loan’s principal balance.
Additional eligible refinancing costs - fees, repair costs, third-party costs, initial reserve deposits, etc.
Also, the minimum DSCR (Debt Service Coverage Ratio) is 1.11x for for-profit borrowers or 1.05x for non-profit borrowers.
HUD allows a Maximum Term of up to 12 years. But the new term cannot exceed the terms of the existing HUD-insured mortgage. For example, refinancing a HUD 221(d)(4) loan cannot exceed 40 years (the original loan term).
Also, the refinancing cannot exceed 75% of the property’s remaining useful life. In some cases, HUD may allow an additional 12 years of financing. This happens only if the additional time can ensure a project’s economic viability.
The interest rate on HUD 223(a)(7) refinancing loans remains fixed for the life of the loan. The actual rate is based on the market conditions at rate lock.