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Below-Market Interest Rates to Purchase or Refinance Existing Multifamily Housing Projects

If you own or are considering the purchase of a multifamily housing project, you may be eligible for financing at below-market interest rates.

How it Works

Section 223(f) of the National Housing Act authorizes the U.S. Department of Housing and Urban Development (HUD) to insure mortgages executed in connection with the purchase or refinancing of an existing multifamily project. Insurance from HUD means significantly reduced risk to lenders.

Because of this reduced risk, many lenders are offering below-market interest rates for mortgages executed under this program. The average interest rate for loans executed during 2017 under this program is just under 3.5%, and some loans have been issued with interest rates of less than 3%.


Unlike other housing programs available through HUD, obtaining financing under Section 223(f) is a non-competitive process and is not limited to rental projects with income restrictions. This means that market-rate projects can also be eligible to benefit from this program.

Some eligibility requirements include:

  • The loan must be for purchase or refinance only (some repairs are allowed, however projects requiring substantial rehabilitation do not qualify)
  • Property must contain at least 5 residential units with complete kitchens and baths
  • A loan may be up to 35 years or 75% of the remaining economic life of the property
  • The remaining economic life of the property must be long enough to permit a 10-year mortgage
  • Certain loan-to-value requirements

Getting Started

Although purchase or refinance under Section 223(f) can provide substantial savings in interest expense, there are other important factors to consider such as reserve and escrow requirements, application fees, rent caps, and continuing compliance requirements.

SVA Certified Public Accountants works with numerous project owners who have purchased or refinanced under Section 223(f). We can help you analyze potential savings under the program, connect you with participating lenders, provide guidance throughout the application process, and assist with continuing program compliance.

Contact us to learn more about how this program could benefit you.

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Biz Tip Topic Expert: Adam Kleinmaus, CPA

Adam Kleinmaus, CPA

Adam is a Principal with SVA Certified Public Accountants with focused expertise in the real estate and nonprofit industries. In his role, he supervises and performs audits for owners of affordable multifamily housing projects receiving Section 42 Low-Income Housing Tax Credits.

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