HUD/FHA Loans
Loans insured by the Federal Housing Administration through the U.S. Department of Housing and Urban Development. HUD-insured programs, including the 221(d)(4) for new construction and the 223(f) for acquisition and refinancing, offer the highest leverage and longest terms available for multifamily properties — up to 87% LTV with 35-40 year fully amortizing terms. HUD loans are non-recourse and fully assumable. The trade-off is a longer approval process and regulatory compliance requirements, including Davis-Bacon wage provisions for construction projects.
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Related Terms
Non-Recourse
A loan structure where the lender's remedies in case of default are limited to the collateral property, and the borrower has no personal liability for any deficiency. Non-recourse loans are standard for CMBS, life company, and agency lending. They typically include "bad boy" carve-outs that make the loan recourse for fraud, misrepresentation, or environmental issues.
Construction Loan
Short-term financing used to fund the development of new commercial real estate projects. Construction loans are disbursed in draws as work is completed, with interest accruing only on funds advanced. They typically feature floating rates, 18-36 month terms, and require personal guarantees. Upon completion, the loan is paid off through permanent financing or sale.
Permanent Financing
Long-term debt (5-30 years) secured by stabilized commercial real estate, underwritten primarily on current cash flow. Permanent loans offer lower rates than transitional financing and are available from life companies, banks, agencies, and CMBS lenders. They are the typical "take-out" financing after construction or bridge loans.
Agency Lenders (Fannie Mae / Freddie Mac)
Government-sponsored enterprises that provide liquidity to the multifamily housing market. Fannie Mae and Freddie Mac offer highly competitive rates with leverage up to 80% LTV for qualifying apartment properties. They provide interest-only options, streamlined underwriting, and are the primary source of permanent financing for stabilized multifamily assets nationwide.
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