CLD - MAH

Affordable Housing Mortgages


How do I finance an affordable housing project? Commercial Loan Direct's MAH product provides flexible terms for acquisition or refinance of multifamily projects nationwide which qualify as affordable housing. Eligible properties are those that participate in the Low Income Housing Tax Credit (LIHTC) program, are encumbered by a Housing Assistance Payment (HAP) contract or participate in the Section 8 program (either through vouchers or direct payments). Our loan programs are listed below.


Affordable Housing Multifamily Loan Programs

 

Fannie Mae Mortgages

Loan Type *Property Type Min Loan Amount Max LTV Term Length Amortization
Fannie Mae (FNMA) A, AH, C, MH, SH, ST $750,000 80% 3-30 Years 15-30 Years
*A = Apartment AH = Affordable Housing C = Cooperative Housing MH = Manufactured Housing SH, = Senior Housing ST = Student Housing
Fannie Mae Info Fannie Mae Rates

Fixed-Rate Mortgage: The Fixed-Rate product is for the purchase or refinance of existing, stabilized properties. Maximum LTV is 80% for purchases and 75% for refinances with a 1.25x DSCR requirement. Loan terms are from 5-15 years.

Adjustable Rate Mortgage 7-6: The ARM 7-6 product is for the purchase or refinance of existing, stabilized properties. Maximum LTV is 80% for purchases and 75% for refinances with a 1.00x DSCR requirement at the loan cap rate. Loan terms are 7 years with a 1 year lock-out period and a 1% prepayment premium thereafter.

Affordable Housing Preservation: This product provides options for preserving the availability and affordability of subsidized rental housing for low-income renters. It is for expiring Low Income Housing Tax Credit (LIHTC) deals, refinancing of tax-exempt bond deals, properties with Section 8 HAP contracts, properties with existing RD 515 and RD 538 loans, and mortgages insured under Sections 202 or 236 of the National Housing Act. Maximum LTV is 80%, minimum DSCR is 1.20x, and loan terms range from 10-30 years.

Green Preservation Plus: The Green Preservation product provides additional loan proceeds to finance energy and water efficiency improvements for existing MAH properties that are 10 years or older and meet MAH income and rent restrictions during the loan term. The Borrower must be a single-asset U.S. entity with all U.S. principals. Maximum LTV is 85% for purchases and 80% for refinances with a 1.20x DSCR requirement.

M-PIRE Mortgage Loan: The M-PIRE product provides first lien and supplemental mortgages for conventional, affordable and cooperative properties that support additional loan proceeds for energy and water efficiency renovations within New York City’s five boroughs. Properties must have a minimum of five units and the Borrower must be a single-asset U.S. entity with all U.S. principals. Maximum LTV is 85% for purchases and 80% for refinances with a 1.20x DSCR requirement.

Tax-Exempt Bond Credit Enhancement: The Bond Credit Enhancement program provides credit enhancement for tax-exempt bonds issued to finance the acquisition, new construction, refinancing, or moderate to substantial rehabilitation of MAH properties with Low Income Housing Tax Credit (LIHTC) rent restrictions. Maximum LTV is 90%, minimum DSCR is 1.15x, and loan terms range from 10-30 years.

Supplemental: The Supplemental Loans product is subordinate financing for properties with a pre-existing fixed or adjustable Fannie Mae Mortgage Loan that has been in place for a minimum of 12 months. Maximum LTV is 75% and minimum DSCR is 1.30x. New third party reports may not be required and early rate lock is available for a fee.

Choice Refinance Program: The Choice Refinance product is a streamlined refinance process with more limited documentation for existing DUS Cash or MBS mortgages to be refinanced by the same Lender. Properties must be stabilized and well-maintained and mortgages must be in good standing.

 

Freddie Mac Mortgages

Loan Type Property Type * Min Loan Amount Max LTV Term Length Amortization
FHLMC A, AH, MH, SH $1,000,000 80% 5-30 Years 30 Years
*A = Apartment AH = Affordable Housing MH = Manufactured Housing SH = Senior Housing
Freddie Mac Info Freddie Mac Rates

9% LIHTC Cash Loan: This low income tax credit loan is for affordable multifamily complexes that have received 9% LIHTC. This can be structured as a forward commitment for new construction or substantial rehabilitation, financing for acquisition or refinance of stabilized properties, or financing for the moderate rehabilitation of the property. Maximum available LTV is 90% and minimum debt service coverage ratio is 1.15x. Terms may also go up to 35 years.

Bond Credit Enhancement with 4% LIHTC: This low income tax credit financing is for affordable multifamily complexes that have received 4% LIHTC. This can be structured as a forward commitment for new construction or substantial rehabilitation, financing for acquisition or refinance of stabilized properties, or financing for the moderate rehabilitation of the property. Maximum available LTV is 90% and minimum debt service coverage ratio is 1.15-1.20x. Terms may also go up to 35 years.

Bond Credit Enhancement with Other Affordability Components: This affordability financing is a credit enhancement program for fixed- or variable-rate multifamily bonds including bond refunding’s, substitutions, or new issue transactions with 80-20 bonds, combination bonds, 501(c)(3) bonds, Section 8, Section 236 or tax abatements. Maximum available LTV is 85% and minimum debt service coverage ratio is 1.25x. Terms may also go up to 30 years.

Cash Loan with Other Affordability Components: This affordable loan is financing for the acquisition or refinance of stabilized affordable multifamily properties (Section 8, Section 236, tax abatement or other) with fixed-rate or floating-rate cash mortgages. Maximum available LTV is 80% and minimum debt service coverage ratio is 1.25x. Terms may also go up to 30 years (unless HUD risk sharing is structured into the deal).

Direct Purchase of Tax-Exempt Mortgages: This affordability financing for the acquisition or refinance of affordable multifamily properties with 4% LIHTC with at least 7 years remaining in the initial LIHTC compliance period. Maximum available LTV is 90% and minimum debt service coverage ratio is 1.15x. Terms may also go up to 18 years and amortizations up to 35 years.

Preservation Rehabilitation Financing: This affordability loan product is financing for the moderate rehabilitation of affordable multifamily properties with new Low-Income Housing Tax Credits (LIHTC). Maximum available LTV is 90% and minimum debt service coverage ratio is 1.15x. Terms and amortizations up to 35 years.

Supplemental Loan: The supplemental loan product is for stabilized properties with Freddie Mac first lien mortgages in place. Loan amounts are $1 million+ and may include interest-only options. Maximum available LTV is 80% and minimum debt service coverage ratio is 1.25x.

Tax-Exempt Bond Securitization (TEBS): The TEBS product is a structure in which a Sponsor transfers privately placed tax-exempt multifamily revenue bonds (and possibly related taxable bonds or mortgages) to FHLMC in exchange for FHLMC senior Class-A M certificates that are sold to investors and Subordinate Class-B M Certificates that are retained by the Sponsor. Minimum pool size is $100 million and minimum debt service coverage ratio is 1.05x.

Variable Liquidity Pricing: This variable product offers variable liquidity pricing comprised of a fixed component for five years and a variable component that adjusts every 90 days with extension(s) available with repricing of the fixed component. This is for Targeted Affordable Housing (TAH) retail bond credit enhancement transactions involving immediate funding and funded forwards and Tax-Exempt Bond Securitization (TEBS) transactions. Maximum LTV is 80$ with a 5 year liquidity contract duration and 10-30 year credit enhancement duration.

Small Balance Mortgages: The Freddie Mac small balance program provides financing of small balance mortgages using hybrid ARM or fixed-rate loan products, offering partial-term and full-term interest-only. This program also features a streamlined process and competitive pricing. The loan amount for this program is $1 million to $5 million.

 

FHA Mortgages

Loan Type Property Type * Min Loan Amount Max LTV Term Length Amortization
FHA / HUD A, AH, C, H, MC, SH, SNF $5,000,000 83.3% 35-40 Years 35-40 Years
*A = Apartment AH = Affordable Housing C = Cooperative H = Hospitals MC= Memory Care SH = Senior Housing SNF= Skilled Nursing Facilities
FHA Info FHA Rates

Rental Housing - Section 207: Section 207 is no longer used for new construction and substantial rehabilitation; developers and lenders prefer Section 221(d)(4), which has more favorable terms. It is, however, the primary product for the Section 223(f) refinancing program. In fiscal year 2013, the Department did not insure any mortgages under this section.

Manufactured Housing - Section 207: Section 207 insures mortgages to provide financing for mobile home parks.

Cooperative Housing - Section 213: Section 213 facilitates the construction, substantial rehabilitation, and purchase of cooperative projects. Each owner shares the whole project with the exclusive right to occupy a specific unit and participate in operations through stock purchases. In fiscal year 2013, FHA insured 2 projects with 114 units, totaling $16.7 million and averaging $8.35 million per transaction.

Rental Housing for Urban Renewal and Concentrated Development Areas - Section 220: Section 220 facilitates multifamily projects in urban renewal areas, code enforcement areas, and other designated revitalization areas. This program is eligible for the Multifamily Accelerated Processing (MAP). In 2013, FHA insured 4 projects with 788 units, totaling $111.3 million and averaging $27,825,000 per project.

Rental & Cooperative Housing - 221(d)(4): Section 221(d)(4) facilitates the construction or substantial rehabilitation of rental and cooperative properties for moderate-income and displaced families. The program allows for long-term mortgages (up to 40 years). This program is eligible for Multifamily Accelerated Processing (MAP). In Fiscal year 2013, FHA insured 160 projects with 24,997 units, totaling $2.47 billion and averaging $15.4 million per project.

Existing Multifamily Rental Housing - Sections 207/223(F): Sections 207/223(f) facilitate the purchase or refinance of existing multifamily properties. Projects that require substantial rehabilitation are not eligible for these programs and must apply for the 221(d)(4) program. Critical repairs must be completed before the loan endorsement. Section 223(f) is eligible for Multifamily Accelerated Processing (MAP). In fiscal year 2013, FDA insured 740 projects with 126,388 units, totaling $7.7 billion for an average project size of $10.4 million.

Supplemental Multifamily Mortgages - Section 241(a): Section 214(a) facilitates supplemental mortgages for projects already insured by an FHA program. This extends the original loan’s economic life and can be used for repairs, additions, or improvements to multifamily projects and group practice facilities, hospitals, or nursing homes. Major equipment for insured medical facilities may be covered by a mortgage under this program. In fiscal year 2013, FHA insured 3 projects with 398 units, totaling $16.9 million for an average of $5.6 million.

Risk-Sharing Program - Qualified Participating Entities (QPE) - Section 542(b): Section 214(a) facilitates supplemental mortgages for projects already insured by an FHA program. This extends the original loan’s economic life and can be used for repairs, additions, or improvements to multifamily projects and group practice facilities, hospitals, or nursing homes. Major equipment for insured medical facilities may be covered by a mortgage under this program. In fiscal year 2013, FHA insured 3 projects with 398 units, totaling $16.9 million for an average of $5.6 million.

Housing Finance Agency Risk-Sharing - Section 542(c) : Section 542(c) provides credit enhancement for mortgages of multifamily projects with loans underwritten, and serviced by HFAs. This is a risk-sharing program. In fiscal year 2013, FHA insured mortgages for 54 projects with 5,009 units, totaling $355 million, for an average of $6.6 million per project.

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