New Construction Loans & Property Development

Both the HUD 221(d)(4) program for the new construction or substantial rehabilitation and the HUD 232 program for the new construction or substantial rehabilitation of healthcare facilities are very appealing to participants that have prior experience with HUD.


  • Combination loan that is interest only loan for the construction period that converts to a 40-year fixed rate that is fully amortized (no conversion risk).
  • Lowest fixed interest rate available in the marketplace. 
  • Long-term fixed rate is great for long-term holders (no balloon payments). 
  • Highest loan-to-value and loan-to-cost available in the marketplace (high leverage).
  • Non-recourse.
  • Assumable.


  • Length of time for HUD approval (7-12 months). 
  • Davis-Bacon wage rates required.
  • Annual CPA audited operating statements.
  • Mortgage Insurance Premium (MIP) required.
  • Higher transaction costs and detailed third-party reports required.

For quicker executions and short-term property holders, Fannie Mae and Freddie Mac programs may fit better to meet your financial objectives.

Loan Type FAQs


  • HUD 213 Construction, Rehabilitation, or Purchase of Cooperative Housing Facilities
    • Designed for the construction, acquisition, or rehabilitation of affordable properties including detached, semidetached, row, walk-up, or elevator type housing consisting of five or more units.
    • Term of up to 40 years (plus up to 36-month construction period); Fully amortizing.
    • Fixed interest rate at commitment for both construction and permanent loans, based on market conditions and risk
  • HUD 221(d)(4) New Construction Multifamily or Substantial Rehabilitation FHA Loan
    • Designed for new construction or substantial rehabilitation of multifamily apartments, including market rate, affordable, and rental assisted properties. 
    • Offers interest-only period for the time of construction plus 2 months, then converted to a fixed 40-year term fully amortizing.
    • Loan is assumable so the prospective buyer can assume the low rate.
    • Loan is non-recourse with the highest loan to costs percentages available.

Healthcare Facilities

  • HUD 232 Construction or Substantial Rehabilitation Loan Program for Healthcare Properties
    • Ideal for the construction or substantial rehabilitation of nursing homes, assisted living facilities, intermediate care facilities, and board and care homes.
    • Offers low fixed interest only rate during the construction period that converts to a permanent rate with a maximum term of 40 years and is fully amortized.
    • Loan is non-recourse and subject to HUD approval.

Affordable Housing

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