Apartment Building & Apartment Complex Loans to $250 Million

FHA® 221(d)(4)

Harris Commercial Capital works with the top lender offering FHA-insured, long-term, fixed-rate financing for new construction or substantial rehabilitation of multifamily projects nationwide. Applications typically processed as a 2-stage application (Preliminary Application followed by Firm Application). HUD-experienced development teams may request “straight to Firm” application, saving significant time by eliminating the Preliminary Application stage.

Term and Amortization Actual construction period plus 40 years (fully amortizing with interest only payable during construction period).

Maximum Loan Amount Will be the lesser of

1. 85% of total eligible development costs (87% for affordable) (90% for 90% project-based rental assistance), replacement cost is value of property for substantial rehabilitation .

2. FHA mortgage statutory per unit limits adjusted for local high cost factor, or

3. An amount that achieves a minimum debt service coverage, as follows: a) 1.176x DSC for market rate properties b) 1.15x DSC for affordable transactions; and c) 1.11x DSC for projects with 90% or greater rental assistance.

Eligible Property New construction or substantial rehabilitation of apartment properties.

Eligible Borrower Single Asset Entity (for profit or non-profit)

Occupancy Requirement Maximum economic occupancy of:

• 93% for market rate properties

• 95% for LIHTC properties having at least 80% LIHTC set aside, and rents at least 10% below markets

• 97% for properties with at least 90% rental assistance contracts (or 90% LIHTC set aside) with rents at least 10% below market

Tax and Insurance Escrows Monthly deposits required

Recourse Non-recourse – Construction and Permanent

Commercial Space Maximum 25% of gross floor area and maximum 15% of effective gross income

Required Reports Market Study, Appraisal, Architect/Cost Review and Phase I. CPA reviewed financial or last fiscal year – sub rehab.

Prepayment Negotiable. Generally two-year lockout with a 10% to 1% declining pre-payment penalty. Other pre-payment options available.

Assumable Subject to Lender and HUD approval and payment of assumption fee

Good Faith Deposit Negotiable based on project type

Expense Escrow Yes – sufficient to cover Lenders expenses and third-party report costs

Origination Fee Negotiable

HUD Application Fee Non-refundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD

V122016

with the firm commitment submission package. For market rate pre-applications, a non-refundable review fee of 15 bps (50% of the firm commitment application fee) is due to HUD with the submission of the pre-application package.

HUD Inspection Fee 0.5% of the mortgage amount for new construction. 0.5% of the cost of the repairs for substantial rehab

Legal/Closing Fee Borrower pays Lenders counsel fee and miscellaneous closing costs.

Rehabilitation Qualifications Repairs must exceed $15,000 per unit (adjusted for local high cost factor) or replacement of 2 or more major building systems.

Davis Bacon Davis Bacon labor standards and wage requirements apply to construction and rehab work.

HUD Mortgage Insurance Premium Annual MIP Rates:

• Market Rate Properties: 0.65%

• Affordable Properties: 0.35%

• Broadly Affordable or Energy Efficient Properties: 0.25%

Harris Commercial Capital provides competitive, tiered pricing for acquisition or refinance of multifamily projects nationwide, including recently completed projects.

• FANNIE MAE DUS® Standard
• Loan Amount $3,000,000
• Loan Term Up to 30 years
• Amortization Up to 30 Years. Interest-only options also available.
• Minimum DSC 1. 25
• Maximum LTV 7-year term or greater, 80%. If cash-out, 75%. 5 years, 75%. If cash-out, 70%.
• Rate Structure Fixed and adjustable rate options available
• Eligible Property Multifamily, minimum five units
• Eligible Borrower Single-asset entity
• Occupancy Requirement 85% Physical Occupancy for 90 days. 70% economic occupancy required.
• Tax and Insurance Escrows Monthly deposits required. May be waived if certain criteria are met.
• Replacement Reserves Underwritten at a minimum $250 per unit per annum
• Recourse Non-recourse with standard exceptions for fraud and misrepresentation
• Commercial Space Maximum 35% of net rentable area and maximum 20% of effective gross income
• Required Reports Appraisal, Properly Condition Assessment and Phase I
• Prepayment Yield Maintenance; Declining prepayment option available for properties between 5 and 50 units.
• Assumable Subject to approval and 1% fee
• Subordinate Financing Not allowed without written approval
• Supplemental Loans Eligible for secondary financing after 12 months
• Pricing Tiered Pricing Matrix. More favorable terms available for higher DSC and lower LTV.
• Rate Lock Standard 10-day rate lock period. Early/Extended rate lock options available.
• Application Deposit Required. Covers all estimated underwriting costs (including processing fee).
• Processing Fee $3,000 non-refundable
• Origination Fee Minimum %. Par pricing available.
• Legal/Closing Counsel Fee to be determined at application
• Good Faith Deposit 2% of Loan Amount, due at rate lock, refundable post-closing