Beneficial Changes to Loan Programs from the 2016 Updated MAP Guide

In January of 2016, Multifamily published its revised Multifamily Accelerated Processing (MAP) Guide, which is intended to cut the time required to approve loan applications and to assure consistent application of program requirements and credit standards across all HUD processing offices. There have been some favorable changes that include better loan parameters, lower MIP rates, and increased repair per unit allowance for the HUD/FHA 223(f) program.

The new MAP guidance provides better loan parameters for both the HUD/FHA 223(f) program for refinancing and purchases, and the HUD/FHA 221(d)(4) program for new construction and substantial rehabilitation of multifamily apartments.

Loan-To-Value (LTV) &  Debt Service Coverage Ratio (DSCR) Adjustments

Overall, the Loan-to-Values (LTV’s) have been increased and the Debt Service Coverage Ratio’s (DSCR’s) decreased for all rental income types.

• In order to qualify as Affordable, the project must meet minimum 20/50 or 40/60 restrictions for at least a minimum of 15 years.
• In order to qualify as Subsidized, the project must have a minimum of 90% of the units receiving project-based assistance for at least 15 years.

Here is a loan parameter comparison:

The previous MAP Guide had the following loan parameters for the HUD/FHA 223(f):

The new MAP Guide has the following loan parameters for the HUD/FHA 223(f):

The previous MAP Guide had the following loan parameters for the HUD/FHA 221(d)(4):

The new MAP Guide has the following loan parameters for the HUD/FHA 221(d)(4):

Change in Mortgage Insurance Premium (MIP) Rates

MIP rates have decreased for the HUD/FHA 223(f) and 221(d)(4) programs. Revised rates are as follows:

• 90% plus LIHTC or Section 8 from 0.45% to 0.25%
• 10 to 90% LIHTC or Section 8 from 0.45% to 0.25%
• Must have 15 plus year Section 8 contracts and/or LIHTC LURA agreements

The old MAP Guide only allowed a certain threshold for maximum repairs per unit to qualify for a 223(f) transaction.  Once the repair limits are exceeded, the loan type would need to be completed as a 221(d)(4) substantial rehabilitation that is subject to the Davis Bacon wage requirements.  This HUD/FHA 221(d)(4) program also carries a .50% to .75% increase in the interest rate over the term of the loan.

The old MAP Guide allowed for $6,500 multiplied by the high cost factor by region up to 270% for maximum repairs per unit, not to exceed $17,550 in repairs per unit.  The new MAP Guide allows for $15,000 multiplied by the high cost factor by region up to 270% for maximum repairs per unit, not to exceed $40,500 in repairs per unit.  The 223(f)-pilot program that has had much success allowing project owners to do repairs up to $40,000 per unit.

Ready to take advantage of the beneficial MAP guide changes including improved loan parameters, lower MIP rates, and increased repair per unit allowance for the HUD/FHA 223(f) program? Contact LSG Lending Advisors today for a free, no obligation loan quote for your multifamily project.

Read more about the added benefits of the updated 2016 HUD MAP Guide here.