Acquisition Construction Financing

FHA SECTION 221(d)(4)

Financing for New Construction or Substantial Rehabilitation of Multifamily Rental Housing and Elderly Housing Including Low-Income Housing Tax Credits and Section 8 Rental Assistance.


  • Combines construction and permanent financing approved at the same time.
  • Maximum loan is 90% of cost; term is 40 years with full amortization.
  • Loan is pre-payable, assumable and non-recourse.
  • Requires a 1.11x debt service coverage based on a maximum of 95% occupancy.
  • Underwriting usually based on market rents with no low income limits.
  • Rehabilitation must involve at least 15% of the project’s replacement cost; $6,500 per unit or replacement of at least 2 major building components.
  • Construction and rehabilitation costs are subject to Davis-Bacon Wage Requirements.
  • Builder’s and Sponsor’s Profit and Risk Allowance (BSPRA) of 10% may be capitalized in the loan and applied towards the cash equity requirement at closing when there is an Identity of Interest between the mortgagor and contractor.


0.30% Application Fee to FHA
0.45% Mortgage Insurance Premium
0.50% Inspection Fee
2.00% Maximum Financing Fee
1.50% Maximum Placement Fee
2.00% Costs of Issuance for Tax-Exempt Bond Transactions

An annual 0.45% Mortgage Insurance Premium payable to FHA is required. For Multifamily Accelerated Processing (MAP), additional fees will be required for third party market studies, environmental reports, appraisals, architectural reviews and cost reports. The cost of these reports may be included in the financing.


  • Full escrows required for property insurance, real estate taxes, and FHA mortgage insurance premium.
  • Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan.
  • An operating deficit escrow may be required by FHA. This escrow must be funded by the borrower at closing with cash or a letter of credit.
  • Working Capital Deposit equal to 4% of the mortgage required at closing. This deposit must be funded by the borrower at closing with cash or a letter of credit.

Other Financing Programs

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CFO Capital Partners, its affiliates and principals are not a United States Securities Dealer nor Broker nor US Investment Adviser.  CFO Capital Partners, its affiliates and principals is a  Consulting Firm and in some instances a Private Investor. All Emails and related correspondence are never to be considered a solicitation for any purpose in any form or content. We do not intend to, nor do we, provide investment advice or counsel to any particular transaction. You, as the Recipient, hereby acknowledges this warning and disclaimer. If acknowledgment is not accepted, Recipients must return the document copies, in their original condition, to the Sender via email or postal services immediately