Refinance of an insured loan
HUD 223(a)(7): the streamlined refinance of an FHA-insured apartment loan
Section 223(a)(7) refinances an apartment loan that is already FHA-insured into a new FHA-insured loan, with a lighter review, a 0.15% HUD application fee and a 30-day target for HUD's decision. It cannot return cash. It pays when your existing note rate or mortgage insurance premium is well above today's, which is why HUD endorsed none in fiscal 2025 and one in fiscal 2026.
Who 223(a)(7) is for
223(a)(7) is only for a property that already carries an FHA-insured loan. The new loan pays off the old one, takes a new FHA project number and stays insured under the same section of the National Housing Act: a refinanced 223(f) loan is still a 223(f) loan, a refinanced 221(d)(4) is still a 221(d)(4). Because HUD already underwrote the property once, the review is lighter than any other program.
The goal is lower debt service: a lower rate, a longer amortization, or both. It is not a cash-out tool. The panel beside this page counts the active loans in HUD’s file that came through 223(a)(7).
Why almost nobody is using it right now
| Fiscal year | 223(a)(7) initial endorsements |
|---|---|
| FY2025 | 0 |
| FY2026 | 1 ($16,972,000) |
HUD’s production summary shows the program has nearly stopped. The reason is arithmetic. In HUD’s active file, loans endorsed from 2012 through 2022 carry median note rates between about 2.5% and 3.9%, and loans endorsed since 2023 sit in the mid-5% range, close to what new loans close at now. Refinancing almost any of them raises the payment. A 223(a)(7) still makes sense in two situations:
- The note rate is high for its loan. Some loans priced well above their vintage’s median, and a few older loans still carry rates above today’s. Our rates page shows realized note rates by year and program, from HUD’s file.
- The premium is high. A loan’s premium is fixed at endorsement. A market-rate 223(f) under the 2012 to 2025 schedules pays 60 basis points a year and a market-rate 221(d)(4) pays 65; a new 223(a)(7) pays 25. On a $20 million loan, 35 basis points is $70,000 a year before any rate change. Many loans already pay a reduced 25 or 35 basis point premium (HUD said 96% of 221(d)(4) and 223(f) closings from March 2024 to March 2025 used one), so check yours first. The MIP savings calculator runs this against your loan’s vintage.
Usually it takes a rate gap and a premium gap together to clear the costs below. The refinance estimator looks up an insured loan from HUD’s file and tests it.
How the loan is sized
The new loan is the lowest of three numbers:
| Test | Rule |
|---|---|
| Original amount | The original principal of the loan being refinanced (or of both loans, if a first and a 241(a) on the same property are combined) |
| Cost to refinance | Unpaid balance, plus closing costs, upfront MIP, the old note’s prepayment penalty, approved repairs, reserve deposits and certain capital-improvement debt |
| Debt service | Payments supportable by 90% of net operating income (1.11x), or 95% (1.05x) where more than 90% of units have project-based Section 8 with more than 15 years remaining, and for Section 213 co-ops |
Debts for operating deficits, deferred fees and past-due payables do not count toward the cost to refinance; a 223(d) operating loss loan is the exception. Because the original amount caps the loan, a 223(a)(7) can never be larger than the loan HUD first insured.
Term
The new loan can be re-amortized over the remaining term or extended by up to 12 years beyond the maturity of the originally insured loan, counting any earlier extensions. It cannot exceed 75% of the property’s remaining useful life or the maximum term of the original section of the Act. A capital needs assessment has to support the longer life.
Fees
| Cost | Amount |
|---|---|
| HUD application fee | 0.15% of the loan |
| HUD inspection fee | None |
| MIP | 0.25% at closing (first year, capitalized), then 0.25% a year |
| Lender financing and placement fees | Up to 3.5% of the first $2 million and 2.0% above (5.5% and 4.0% with bonds); lender legal fees are outside this calculation |
| Old loan’s prepayment penalty | Mortgageable; the lender may pay it from its own profit if disclosed to and approved by HUD |
Lenders cannot pay the application fee or due diligence costs for the borrower; HUD treats that as a kickback. The fees guide has a worked example, and the prepayment calculator estimates the old note’s penalty.
What makes a property ineligible
- The existing loan is a Risk Share loan (barred by statute), a co-insured loan, a Section 202 loan or another HUD-held loan (Mark-to-Market restructurings excepted).
- The work needs Davis-Bacon wages or an environmental review above the lowest level (categorically excluded, not subject to the related laws).
- The plan adds units, height or footprint, or involves ground-disturbing repairs.
- Separate properties: 223(a)(7) cannot consolidate loans on different legal parcels, even adjacent ones.
Critical repairs are finished before closing. Non-critical repairs can be escrowed at 110% and completed within 12 months.
How the process runs
- Prepayment request. The current servicer files HUD’s prepayment request (form HUD-9807). If a different lender is refinancing, a borrower letter asking the servicer to file it goes with the application.
- Capital needs assessment. Required for every 223(a)(7).
- Firm application. Signed by an approved officer of the lender. HUD’s standard is a decision within 30 calendar days of a complete application; site visits and a MAP underwriter are generally not needed.
- Rate lock and closing. The old loan is paid off and the new one endorsed under a new project number.
If the numbers do not work as a 223(a)(7), the alternatives are a 223(f) (cash-out allowed, full underwriting, 0.30% fee) or leaving the loan in place and selling it with the property; see HUD loan assumption.
Sources
- HUD MAP Guide, Handbook 4430.G, 2020 edition, section 3.8 and chapter 18 (Section 223(a)(7))
- 90 FR 45789, Changes in Mortgage Insurance Premiums for FHA multifamily programs (Sept. 23, 2025)
- 81 FR 18473, Changes in certain multifamily mortgage insurance premiums (Mar. 31, 2016)
- 12 U.S.C. 1715n, Section 223 of the National Housing Act
- HUD Office of Multifamily Housing, FY2026 production summary
- HUD, Multifamily FHA insured mortgages, active file
Checked against these sources on October 31, 2026. HUD changes program rules by Mortgagee Letter and Federal Register notice; the lender's commitment governs any loan.
Short answers
Can I take cash out with a 223(a)(7) refinance?
No. HUD does not allow equity take-outs under 223(a)(7). Proceeds can only pay off the existing FHA-recognized debt, the costs of refinancing (including prepayment penalties on the old note), approved repairs and reserve deposits. For cash out, the property would refinance under 223(f) instead.
Does a 223(a)(7) refinance lower my mortgage insurance premium?
Yes. A loan's premium is fixed at endorsement and cannot change afterward, but a 223(a)(7) is a new insured loan, and applications on or after October 1, 2025 pay 0.25% a year. A 223(f) loan endorsed at the old 60 basis point market rate, or a 221(d)(4) loan at 65, would drop to 25.
Can I use 223(a)(7) during the 223(f) five-year prepayment lockout?
The statute that bars prepaying a 223(f) loan for five years does not bar refinancing it through 223(a)(7). The old loan's Ginnie Mae or bond prepayment penalty still applies, though it can be included in the new loan amount.
How long does a 223(a)(7) take?
HUD's standard is a firm commitment decision within 30 calendar days of a complete application. Site visits and a MAP underwriter are generally not required. The lender's work (capital needs assessment, title, rate lock) adds time around that, and HUD does not publish an end-to-end figure.
Is my risk-sharing loan eligible?
No. Risk Share loans are excluded from 223(a)(7) by statute, and the MAP Guide also excludes co-insured loans, Section 202 loans and other HUD-held loans except those restructured under Mark-to-Market.