Urban renewal and mixed use
HUD Section 220: construction loans for mixed-use housing in revitalization areas
Section 220 insures construction or substantial rehab loans for mixed-use apartment projects in designated revitalization areas, including Opportunity Zones. It sizes like 221(d)(4) but lets commercial space produce up to 30% of effective gross income, against 15% under 221(d)(4). It is a niche program: only a few dozen active loans sit in HUD's file.
What Section 220 does
Section 220 is the FHA program for new construction or substantial rehabilitation of mixed-use housing in areas where a local government is carrying out a revitalization effort. It is processed under the MAP Guide like 221(d)(4) and borrows 221(d)(4)’s sizing tests, Davis-Bacon requirement, BSPRA and SPRA allowances and construction rules. What sets it apart is commercial income.
| Section 220 | Section 221(d)(4) | |
|---|---|---|
| Commercial share of net rentable area | up to 25% | up to 25% |
| Commercial share of effective gross income | up to 30% | up to 15% |
| Location requirement | Eligible area (below) | None |
| Age-restricted projects | Not permitted | Permitted if HUD elderly rules are met |
| Middle Income 90% / 1.11x tier | Not available | Available |
| Statutory per-unit limits | Section 207/220 table | Section 221(d)(4) table |
Commercial space has to serve residents of the project and the surrounding area. The MAP Guide points projects with more than 20% commercial income in a 220-eligible area to Section 220.
Where it can be used
The property must sit in an area approved by the HUD Multifamily regional office, or in one of these:
- an Opportunity Zone;
- an approved urban renewal area under Title I of the Housing Act of 1949;
- an area of concentrated code enforcement under Section 117 of that Act;
- a disaster urban renewal project, or a pre-1954 slum clearance project under federal contract.
Locally designated areas need a strategy that combines physical improvements, public services, housing and private investment and can produce lasting improvement in a reasonable time. It can be informal.
Opportunity Zone deals also get a reduced HUD application fee of 0.20% (0.30% is standard) under section 3.1.36 of the MAP Guide.
Terms
- Loan to cost and coverage: the same as 221(d)(4). Since Mortgagee Letter 2025-03 that is 87% at 1.15x for market rate and 90% at 1.11x for affordable or 90%-assisted projects.
- Term: construction plus up to 40 years, fixed rate, fully amortizing, non-recourse.
- MIP: 0.25% a year, with the upfront premium covering each year of construction.
- Statutory limits: Section 220 shares the Section 207 per-unit table. For 2026 the indexed base for a two-bedroom elevator unit is $108,925 before the 270% standard high cost multiplier. The ROAD to Housing Act raised that base to $265,122, but HUD has not yet implemented the new amounts. Check a property in the statutory limit calculator.
How often it is used
Rarely. The panel beside this page counts the active Section 220 loans in HUD’s file: a few dozen nationwide, with large median property sizes, and no new endorsements in the twelve months to September 2026. Most mixed-use apartment projects keep commercial income under 15% and use 221(d)(4). Section 220 earns its place when the retail or office component is large enough to break 221(d)(4)’s income cap and the site qualifies.
Sources
- HUD MAP Guide, Handbook 4430.G, 2020 edition, section 3.4 (Section 220) and 3.1.36 (Opportunity Zones)
- HUD Mortgagee Letter 2025-03, Multifamily changes in DSCR and LTV/LTC (Jan. 8, 2025)
- HUD Mortgagee Letter 2026-1, Middle Income Housing option for 221(d)(4)
- 90 FR 45789, Changes in Mortgage Insurance Premiums for FHA multifamily programs (Sept. 23, 2025)
- Annual indexing of statutory mortgage limits, CY2026 (91 FR 24597, FR Doc. 2026-08795)
- Public Law 119-101, 21st Century ROAD to Housing Act, section 211
- HUD, Multifamily FHA insured mortgages, active file
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
When should I use Section 220 instead of 221(d)(4)?
When the project is in an eligible revitalization area and commercial space will produce more than 15% of effective gross income. The MAP Guide says projects with more than 20% commercial income in a 220-eligible area should use Section 220. Otherwise 221(d)(4) is simpler and far more common.
Is every Opportunity Zone eligible for Section 220?
Opportunity Zones are one of the listed eligible area types in the MAP Guide, alongside urban renewal areas, concentrated code enforcement areas and locally designated revitalization areas approved by the HUD regional office.
Can a Section 220 project be senior housing?
No. Apartments designed for or restricted to elderly occupancy, or relying on the Fair Housing Act's housing-for-older-persons exemption, are not permitted under Section 220. Senior projects go to Section 231 or, if they comply with HUD's elderly-housing rules, 221(d)(4).
What is the Section 220 MIP?
0.25% upfront and 0.25% a year for applications on or after October 1, 2025, the same as every other FHA apartment program. The market-rate premium had been 70 basis points.