Multifamily
HUD 223(f) Apartment Refinance and Acquisition Loans
Section 223(f) insures loans to buy or refinance existing apartment properties with five or more units. The loan runs up to 35 years at a fixed rate, fully amortizing and non-recourse, at up to 87% of value for market-rate properties.
Key terms
| Term | Section 223(f) |
|---|---|
| Eligible properties | Existing rental housing with 5 or more units: garden, mid-rise, high-rise, and townhome or row-house communities, including scattered sites with 5 or more units on each. Properties that need substantial rehabilitation are not eligible |
| Uses | Refinance, including cash out, or acquisition |
| Maximum loan | The lowest of: 87% of value (90% for affordable and rent-assisted properties); the amount supported by a 1.15 DSCR (1.11 affordable and rent-assisted); HUD's statutory per-unit limits; on a purchase, a percentage of acquisition cost |
| Cash out | Up to 80% of value. Between 80% and 87%, proceeds are limited to the cost to refinance |
| Term | Up to 35 years, or 75% of the property's remaining economic life if less |
| Rate | Fixed for the full term, fully amortizing, non-recourse with standard carve-outs |
| Mortgage insurance premium | 0.25% annual and 0.25% upfront |
| Property age | Certificate of occupancy at least 3 years old. Newer properties qualify once they reach the required DSCR for a full month, with added conditions |
| Occupancy | Average physical occupancy of at least 85% for the 6 months before application, maintained through closing |
| Repairs | Up to HUD's substantial rehabilitation threshold (a 2026 base of $20,406 per unit, adjusted by the local high-cost factor). Critical repairs before closing; the rest within 12 months |
| Davis-Bacon | Does not apply |
| Prepayment | Negotiated lockout or declining penalty, ending by year 10. A loan prepaid within 5 years of closing carries a statutory requirement to keep the property as rental housing for the rest of those 5 years, unless HUD approves otherwise |
| Loans of $130 million and up | Tighter limits: 1.30 DSCR and 75% of value for market-rate properties (70% with cash out) |
| Reports | Appraisal, Capital Needs Assessment, Phase I environmental site assessment, radon test, title and survey |
| Build-to-rent | Communities of detached homes, duplexes and triplexes qualify only if the certificate of occupancy is less than 3 years old at application. See HUD build-to-rent loans |
Cash you bring to closing
- Refinance: usually none when the loan covers the payoff, closing costs, repairs and the initial reserve deposit. With cash out, you receive money at closing.
- Acquisition: the purchase price plus closing costs, repairs and reserves, less the loan.
- If repairs are deferred past closing on a cash-out refinance, HUD holds 50% of the cash out until they are done.
When it makes sense
- A construction or bridge loan is coming due. A 223(f) replaces floating-rate debt with a 35-year fixed rate once the property is complete and leased.
- You want long-term fixed debt without recourse. No balloon, no personal guarantee beyond standard carve-outs.
- You are buying a stabilized property. 223(f) finances acquisitions, not just refinances.
- You want cash out. A refinance can return equity up to 80% of value.
Need short-term debt first? See Bridge-to-HUD financing. Comparing options? See HUD 223(f) vs. agency vs. bank. Already have a HUD loan? See the 223(a)(7) streamlined refinance.
How it works
1
Send us the numbers
T-12, current rent roll, and the loan statement or purchase contract. We size the loan and show your cash to close.
2
Third-party reports
We order the appraisal, Capital Needs Assessment and environmental report.
3
Firm application and HUD review
We submit to HUD and answer its review comments. A concept meeting comes first on larger or more complex deals.
4
Firm Commitment, rate lock and closing
HUD issues a Firm Commitment, the rate is locked, and the loan closes.
5
After closing
Non-critical repairs are completed, generally within 12 months.
Common questions
Can a 223(f) be used to buy a property?
Yes. Section 223(f) insures loans for both the purchase and the refinance of existing rental housing. On a purchase, the loan is also limited to a percentage of the acquisition cost.
Can I take cash out?
Yes, up to 80% of value. If non-critical repairs are deferred, half of the cash out is held until they are finished.
How new can the property be?
The standard rule is a certificate of occupancy at least 3 years old. A newer property qualifies once it reaches the required DSCR for a full month. HUD then requires 3 months at that DSCR before closing and holds half of any cash out as a debt service reserve until the property shows 6 months at that DSCR. HUD can waive these tests case by case.
What occupancy does HUD require?
Average physical occupancy of at least 85% over the 6 months before application. HUD underwrites market-rate properties at no more than 93% economic occupancy.
How much renovation can a 223(f) include?
Repairs up to HUD's substantial rehabilitation threshold. No new units can be added, and new amenity buildings are limited to 5,000 square feet. Larger scopes are a 221(d)(4) substantial rehabilitation.
Can I refinance debt I took on in the last year?
HUD counts debt placed within a year of application only if it funded an arm's-length acquisition, construction or capital improvements, or a bridge loan that retired such debt.
Does Davis-Bacon apply?
No. Davis-Bacon prevailing wages do not apply to a 223(f), including its repairs.
Send us the T-12 and rent roll and we'll size your 223(f) and your cash to close.
Updated October 2026. Program terms summarize HUD's MAP Guide and current Mortgagee Letters, including ML 2025-03 and ML 2026-05; every loan is subject to HUD approval. Not a commitment to lend. See also: HUD 221(d)(4) construction loans | HUD build-to-rent loans | Case studies | HUD loan types.