What are the Occupancy Requirements for HUD 223(f) Loans?
Many HUD multifamily loans have minimum property occupancy requirements, and HUD 223(f) loans are no different. HUD 223(f) financing typically requires a minimum of 85% occupancy for the last 6 months before closing.
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Many HUD multifamily loans have minimum property occupancy requirements, and HUD 223(f) loans are no different. HUD 223(f) financing typically requires a minimum of 85% occupancy for the last 6 months before application, which needs to be maintained until closing. Fortunately for borrowers, these loans are underwritten at slightly higher occupancies, including:
93% occupancy for market rate properties
95% for properties with at least 80% LIHTC units
97% for projects with at least 90% LIHTC or Section 8 units
What are the occupancy requirements for HUD 223(f) loans?
HUD 223(f) Loan Occupancy Requirements
Many HUD multifamily loans have minimum property occupancy requirements, and HUD 223(f) loans are no different. HUD 223(f) financing typically requires a minimum of 85% occupancy for the last 6 months before application, which needs to be maintained until closing. Fortunately for borrowers, these loans are underwritten at slightly higher occupancies, including:
- 93% occupancy for market rate properties
- 95% for properties with at least 80% LIHTC units
- 97% for projects with at least 90% LIHTC or Section 8 units
What is the minimum occupancy rate for HUD 223(f) loans?
The minimum occupancy rate for HUD 223(f) loans is 85% for the last 6 months before application, which needs to be maintained until closing. For market rate properties, the maximum underwritten occupancy is 93%. For affordable properties this occupancy is 95%, and for rental assistance properties, it is 97%.
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How long must a property be occupied before it can qualify for a HUD 223(f) loan?
Prior to application for HUD 223f loans, properties must have an average occupancy of 85% for the preceding six months. This occupancy rate must be maintained throughout the application process.
What is the maximum occupancy rate for HUD 223(f) loans?
The maximum occupancy rate for HUD 223(f) loans is 93% for market rate properties, 95% for affordable properties, and 97% for rental assistance properties.
Source: HUD 223(f) Loans: Terms, Qualifications and Guidelines and What are the Occupancy Requirements for HUD 223(f) Loans?
Are there any restrictions on the types of tenants that can occupy a property financed with a HUD 223(f) loan?
Yes, there are restrictions on the types of tenants that can occupy a property financed with a HUD 223(f) loan. Commercial tenants are restricted to using 25% of net rentable area and must not generate more than 20% of the project's effective gross income. Furthermore, any commercial tenant that exceeds 5% of a property’s effective gross income (EGI) will need to undergo a separate credit analysis. Source 1, Source 2, Source 3.