Rules
Davis-Bacon and HUD multifamily loans: where prevailing wages apply
Davis-Bacon prevailing wages apply to FHA-insured new construction and substantial rehabilitation: 221(d)(4), 220 and 231, whether HUD insures advances or only the permanent loan, and to most 241(a) supplemental loans. They do not apply to 223(f) purchases and refinances, and a project whose work would trigger Davis-Bacon is not eligible for a 223(a)(7).
Where it applies, program by program
| Program | Davis-Bacon? | Rule |
|---|---|---|
| 221(d)(4) new construction or substantial rehab | Yes | MAP 3.2.6 |
| 220 and 231 new construction or substantial rehab | Yes | MAP 3.2.6 (applies to all FHA NC/SR programs) |
| Any NC/SR with insurance upon completion | Yes | MAP 3.2.2: applies to insurance of advances and insurance upon completion |
| 241(a) supplemental loan | Yes, usually | Not when the first mortgage is 223(f) or 223(a)(7), or for certain Secretary-held mortgages on projects that never had a Davis-Bacon loan |
| 223(f) purchase or refinance, with or without repairs | No | MAP 3.7.9 |
| 223(a)(7) streamlined refinance | No | MAP 3.8.7: a project whose work would require Davis-Bacon is not eligible for 223(a)(7) |
The legal hook is section 212 of the National Housing Act. HUD’s regulation, 24 CFR 200.33, applies the Department of Labor’s labor standards rules to the extent section 212 does, says they do not apply to projects insured under Section 207 pursuant to 223(f), and makes a 241(a) supplemental loan follow the section under which the first mortgage was insured.
A build-to-rent community financed under 221(d)(4) is new construction, so the same rules apply to it.
What it requires
- Prevailing wages. The general contractor and all subcontractors pay at least the wage and fringe rates in the applicable wage determination.
- Weekly certified payrolls. The Copeland Act regulations require weekly certified payroll reports.
- Contract terms. The wage rates and HUD’s supplementary conditions (form HUD-92554M) go into the construction contract (form HUD-92442M).
Two exceptions in the MAP Guide matter in practice:
- Off-site improvements are not covered.
- Work before the federal nexus is not covered. The nexus is created when the lender submits a pre-application or a firm application to HUD, so demolition or site work finished before that is outside Davis-Bacon.
How wage rates get set on a HUD deal
- Before HUD issues the firm commitment, the HUD office sends the application to HUD’s Davis-Bacon and Labor Standards (DBLS) staff and gets written confirmation of the wage decision, with copies of the selected general wage determinations.
- HUD forwards the wage decision to the lender. The Department of Labor publishes general wage determinations on SAM.gov; HUD’s own sample invitation letter tells lenders to check SAM.gov for updates while preparing the firm application.
- After the firm commitment, DBLS reviews the draft construction contract to confirm the right rates and supplementary conditions are in it.
- HUD obtains written DBLS clearance at least one business day before initial closing, and on the morning of closing confirms the modification number of each wage determination in effect.
- HUD will not clear the loan for closing or endorse the note until DBLS has cleared it and any Department of Labor withholding or findings are satisfied.
HUD also coordinates the pre-construction conference with DBLS, so labor compliance starts on day one of construction.
Why it matters to the deal
Davis-Bacon affects construction cost, the contractor pool and the closing timeline, since a missing or wrong wage decision can hold up initial endorsement. It is also a reason owners choose program carefully: an existing property that needs a moderate repair scope can often be handled under 223(f) without prevailing wages, while a scope above the substantial rehabilitation threshold must be financed under 221(d)(4), with Davis-Bacon.
The Department of Labor’s 2023 Davis-Bacon regulations have been challenged in court, and we have not confirmed their current status from a primary source, so this page does not describe them. We found no HUD multifamily Mortgagee Letter changing Davis-Bacon treatment in 2024 through 2026.
Sources
- HUD MAP Guide, Handbook 4430.G, 2020 edition: 3.2.2 and 3.2.6 Federal Labor Standards, 3.6.5 (241(a)), 3.7.9 (223(f)), 3.8.7 (223(a)(7))
- HUD MAP Guide, 2020 edition, 19.2.2 Prevailing Wage Rates and Davis-Bacon Labor Standards (closing)
- SAM.gov, wage determinations (Davis-Bacon general wage determinations)
- 24 CFR 200.33, Labor standards (FHA multifamily)
Checked against these sources on October 30, 2026. HUD changes program rules by Mortgagee Letter and Federal Register notice; the lender's commitment governs any loan.
Short answers
Does Davis-Bacon apply to HUD 221(d)(4) loans?
Yes. The general contractor and every subcontractor on an FHA-insured new construction or substantial rehabilitation loan must pay prevailing wages under the Davis-Bacon Act and file weekly certified payrolls under the Copeland Act. It applies whether HUD insures the construction advances or only the permanent loan after completion.
Does Davis-Bacon apply to a HUD 223(f) loan?
No. The MAP Guide says Davis-Bacon prevailing wage requirements do not apply to Section 207/223(f), including the repairs done under it. That is one reason a moderate repair scope is usually cheaper to carry out under 223(f) than as a 221(d)(4) substantial rehabilitation.
Where do I find Davis-Bacon wage rates for a HUD project?
General wage determinations are published by the Department of Labor on SAM.gov. On a HUD deal, HUD's Davis-Bacon and Labor Standards staff confirm which determination applies; the HUD office forwards that wage decision to the lender, and the rates go into the construction contract. HUD confirms the modification number in effect on the morning of closing.
Does work done before applying count?
Davis-Bacon rates do not apply to site demolition or improvements completed before the federal nexus, which the MAP Guide defines as submitting either a pre-application or a firm application to HUD. They also do not apply to off-site improvements.