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Refinancing a HUD 232 Loan with the HUD 232/223(a)(7) Program
If you currently own a property financed with a HUD 232 or HUD 232/223(f) loan, and you want to refinance it, you may be able to do so with the HUD 232/223(a)(7) loan. As long as you’re a borrower in good standing, and can meet the minimum DSCR requirements, the HUD 232/223(a)(7) refinance is incredibly easy to apply for. Unlike most other HUD multifamily loans, HUD 232/223(a)(7) refinances don’t require appraisals, environmental assessments, or most other third-party reports. Instead, it only requires a PCNA (project capital needs assessment).
The terms of the HUD 232/223(a)(7) refinance loan include:
Loan Term: HUD 223(a)(7) loans may increase the loan term by up to 12 years. However, the new loan cannot be longer than the original loan term (40 years maximum for HUD 232 loans and 35 maximum for HUD 232/223(f) loans
Loan Size: Limited by minimum DSCR
For-profits: 1.11x minimum DSCR
Non-profits: 1.05x minimum DSCR
Interest Rates: HUD 223(a)(7) loans have fixed interest rates
Recourse: Non-recourse (standard bad-boy carve-outs apply)
MIP: 0.55% of the entire loan amount