Leverage and term
HUD 223(f) provides up to 85% LTV (87% for affordable) on stabilized refinance and acquisition, with 35-year fully amortizing terms. HUD 221(d)(4) provides up to 85% LTC on ground-up construction, with 40-year fully amortizing terms after construction. These are the highest-leverage, longest-term loans available in the multifamily market.
Agency loans (Fannie Mae and Freddie Mac) typically provide up to 80% LTV on stabilized multifamily, with 5- to 30-year terms and amortization options up to 30 years. Agency execution is faster than HUD and offers more structural flexibility, but at lower maximum leverage and shorter term.
Process and timeline
HUD loans take 6 to 12 months from application to close, with substantial third-party reports (appraisal, environmental, market study, architectural review for construction) and a multi-stage HUD approval process. The timeline is the primary cost of HUD execution, but the resulting debt is uniquely cheap and long.
Agency loans typically close in 60 to 90 days. The process is more standardized: Fannie Mae and Freddie Mac DUS lenders quote, underwrite, and close on standardized terms, with limited customization. The trade-off is execution speed for structural flexibility.
When to use which
HUD wins when maximum leverage and longest term matter most, typically on long-hold core multifamily, affordable housing, and stabilized assets where the sponsor wants to lock in 30+ years of fully amortizing debt at the lowest possible coupon.
Agency wins when execution speed matters and the sponsor doesn't need the absolute maximum leverage, typically on acquisition refinances with a clear closing window, smaller transactions where HUD's process cost is prohibitive, and assets where the sponsor wants the option to refinance or sell within 10 years.
Frequently asked questions
- Are HUD multifamily loans non-recourse?
- Yes. HUD multifamily loans are non-recourse to the sponsor, subject to standard bad-boy carve-outs. This is one of the key advantages of HUD execution alongside maximum leverage and long term.
- How long does a HUD 223(f) loan take to close?
- HUD 223(f) loans typically close 6 to 9 months from application, depending on third-party report turnaround and HUD's processing queue. Experienced HUD borrowers and lenders can sometimes close in 4 to 5 months.
- Can agency loans be used on affordable housing?
- Yes. Both Fannie Mae and Freddie Mac have dedicated affordable housing programs (Fannie's MAH, Freddie's TAH) with attractive pricing and structural flexibility for LIHTC, Section 8, and other affordable executions.
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