HUD Multifamily Loans: A Broker’s Guide to 223(f), 221(d)(4), and More

HUD-insured loans (via the FHA) offer some of the longest, most borrower-friendly terms in commercial real estate — but only for two asset classes: multifamily housing and healthcare facilities.

If the asset doesn’t fall into one of those categories, HUD is simply not an option. They’re especially appealing for borrowers looking for maximum leverage, long amortization, and fully nonrecourse debt — but they require patience, thorough documentation, and a willingness to navigate a long and detailed approval process.

This guide, one part in our series on all types of commercial financing, breaks down the main HUD products, what brokers need to watch out for, and how to navigate the slow but rewarding path to closing.

What Are HUD/FHA Loans?

HUD doesn’t lend money directly. Instead, it insures loans made by approved lenders through its multifamily and healthcare programs. These loans are underwritten according to FHA standards and are funded by private institutions.

Key programs include:

• 223(f): For refinancing or acquiring stabilized multifamily properties
• 221(d)(4): For ground-up construction or substantial rehab of multifamily
• 223(a)(7): For refinancing existing HUD loans with minimal underwriting
• 232: For senior housing and skilled nursing facilities
• 241(a): For additions to existing HUD-insured properties

All HUD loans are nonrecourse, fully amortizing, and come with terms up to 35 to 40 years, depending on the program.

When HUD Loans Make Sense

HUD financing works best for borrowers who are in it for the long haul. It’s designed for serious developers and owners who prioritize long-term, stable debt over quick execution. If your client is planning to hold a property for decades — or wants to lock in 35-year amortization without balloon risk — HUD may be the best fit.

That said, borrowers need to be realistic. This isn’t a fit for quick flips or anything transitional. Ideal profiles include:

• Long-term holders seeking maximum leverage and amortization
• Developers with defined construction timelines and experience
• Sponsors looking to refinance out of short-term or bank debt into something permanent

The most common use cases include stabilized market-rate or affordable housing (under 223(f)), new multifamily construction (under 221(d)(4)), or skilled nursing and senior housing facilities (under 232).

What HUD Won’t Finance

HUD isn’t built for speed or flexibility. Avoid submitting deals that are:

• Transitional or value-add without a clear long-term hold plan
• Condos, student housing, or single-family portfolios
• In early lease-up or with significant deferred maintenance (for 223f)
• Without full drawings, permits, or cost breakdowns (for 221d4)
• Small balance (generally under $5 million)

Just remember these loans take a lot of time to move through the approval processes. If your client needs to close in 90 days, these absolutely are not the programs you'll want to consider: Some HUD 221(d)(4) loans, for example, can take around a full calendar year to close. HUD 223(f) loans, while faster, can still take upwards of half a year.

What Lenders and HUD Want to See

• Sponsor strength: Experience with multifamily or healthcare projects
• Project readiness: For 221(d)(4), HUD expects full site control, permits, and construction plans
• Stabilization: For 223(f), at least 90 percent occupancy for 6 months
• DSCR and LTV: Varies by program, but typically 1.15x+ DSCR and up to 87 percent LTV
• Environmental review: HUD requires a full Phase I, and sometimes Phase II

HUD lenders will walk the borrower through these — but it’s your job as a broker to get ahead of the curve.

What Brokers Often Miss

1. Underestimating the timeline

HUD loans can take 6 to 12 months to close, even on a good day. Clients need to know that up front.

2. Weak consultants

Having a good HUD consultant or third-party packager can make or break the process.

3. Missing early deal killers

Past HUD violations, environmental issues, or incomplete documents can stall the entire pipeline.

4. Failing to prep borrower expectations

This is a paperwork-heavy, government-guided process. If your borrower wants speed, find another path.

5. Thinking all lenders are equal

HUD-approved lenders vary wildly in experience and execution. Work with one that does this volume regularly.

What to Do If It Doesn’t Fit

If a deal isn’t right for HUD, suggest:

• Bridge-to-HUD strategies for deals not yet stabilized
• Agency debt (as in, Fannie Mae or Freddie Mac multifamily loans) if the borrower needs more speed
• Bank or credit union loans for smaller balances or faster turnarounds

Placing HUD Deals Successfully

Success with HUD starts before the application is ever submitted. The process is complex, but manageable — if you guide your client properly from day one. That means educating them on timelines, packaging the deal clearly, and connecting them with the right consultants and lenders.

Start early, especially for construction or rehab projects. Don’t wait until permits are in hand — HUD timelines often stretch 6 to 12 months. And choose your partners wisely: Not all HUD-approved lenders are equal, and a good consultant can prevent a lot of headaches.

Brokers who consistently close HUD deals tend to follow the same playbook: clean documentation, clear borrower expectations, and zero surprises.

Making HUD Work for You

HUD loans aren’t for every deal — or every borrower. But when the timing, sponsor, and asset align, they offer unbeatable terms and long-term security.

As a broker, your role is to identify which clients can benefit from HUD’s structure — and help them prepare for the commitment. If you get it right, these loans can be a cornerstone strategy in your commercial debt toolkit.