Apartment Building

FHA Mortgage Insurance For Rental Housing: HUD Section 207

Section 207 insures mortgages to provide financing for multifamily rental housing properties. The Section 207 mortgage insurance is currently no longer used for new construction or substantial rehabilitation. Section 207 mortgage insurance's primary application is to insure the Section 223(f) refinancing program. New multifamily construction projects and substantial rehabilitation projects are currently insured by the Section 221(d)(4) programs.

Section 207 Purpose

Section 207 protects lenders by insuring them against losses from loan defaults. The primary role of the Section 207 program is to provide high quality, reasonably priced multifamily rental housing for the middle class.

Eligible Uses

Section 207 mortgage insurance can be used to finance the substantial rehabilitation or construction of properties with at least five units. A property is eligible for Section 207 mortgage insurance if the sponsor can demonstrate that the project is financially self-sustained. There are also LTV and DSCR limitations. The mortgage is limited to 90% of the appraised value.

Eligible Borrowers

Borrowers who are eligible include commercial real estate investors, developers, builders, and others who fulfill the HUD requirements for mortgagors.

FHA Apartment Loans - HUD Multifamily Mortgages