# HUD 223(f): buying or refinancing an existing apartment property

> Section 223(f) is FHA's insured loan for buying or refinancing an existing apartment property of 5 or more units. Since January 2025 it lends up to 87% of value at a 1.15x debt service coverage for market-rate deals and 90% at 1.11x for affordable ones, fixed for up to 35 years, non-recourse, with a 0.25% annual MIP.

- URL: https://hudmultifamily.loan/programs/223f/
- Updated: 2026-10-31 (first published 2026-10-30)
- Section: programs

## Key facts

| Item | Value |
|---|---|
| Use | Purchase or refinance, existing property |
| Max LTV, market rate | 87% |
| Max LTV, affordable | 90% |
| Min DSCR | 1.15x market, 1.11x affordable |
| Term | Up to 35 years, fully amortizing |
| Rate | Fixed, negotiated with the lender |
| MIP | 0.25% upfront, 0.25% a year |
| Recourse | Non-recourse (bad-acts carve-outs) |
| Prepayment | No prepay in first 5 years, by statute |
| Davis-Bacon | Does not apply |
| Assumable | Yes, with HUD approval (TPA) |

## Who 223(f) is for

223(f) fits a stabilized apartment property that already exists: you are buying it, or you own it and want long, fixed, non-recourse debt in place of a bank loan, a bridge loan or a maturing agency loan. It is the most used FHA apartment program by a wide margin; the panel beside this page counts the active loans in HUD's own file.

It does not fit a property that needs a gut rehab (that is [221(d)(4) substantial rehabilitation](/programs/221d4/)), a building still in lease-up without coverage, or an owner who expects to sell or refinance inside five years.

## The 2026 terms

HUD sizes a 223(f) loan at the **lowest** of several tests. Whichever number comes out smallest is the loan.

| Test | Market rate | Affordable | 90%+ rental assistance |
|---|---|---|---|
| Loan to value | 87% | 90% | 90% |
| Debt service coverage | 1.15x | 1.11x | 1.11x |
| Minimum vacancy in underwriting | 7% | 5% | 3% |
| Cash-out cap | greater of 80% of value or actual refinance cost | same | same |
| Statutory per-unit limit | CY2026 table x high cost percentage | same | same |

Debt service in the coverage test includes the 0.25% annual mortgage insurance premium, so the October 2025 MIP cut raised proceeds on coverage-limited deals. Loans of **$130 million or more** (the 2026 large-loan threshold) are sized more conservatively: 75% and 1.30x for market rate. The statutory per-unit limits and how the high cost percentage multiplies them are on the [statutory limits page](/learn/statutory-limits/).

Other fixed terms:

- **Term:** up to 35 years or 75% of the property's remaining economic life, whichever is less; at least 10 years. Fully amortizing, level payments, no interest-only period.
- **Rate:** fixed, negotiated between you and the lender, locked before endorsement. HUD does not set it. Our [rates page](/rates/) shows what recent 223(f) loans actually closed at, from HUD's file.
- **Borrower:** a single-asset entity. Individuals, TICs and DSTs can hold interests above it but cannot be the borrower.
- **Commercial space:** existing only, up to 25% of net rentable area and 20% of effective gross income.
- **Repairs:** life-safety repairs before closing; other repairs can be escrowed at 120% and finished after.

## What it costs

| Cost | Amount |
|---|---|
| HUD application fee | 0.30% of the loan |
| MIP | 0.25% at closing, then 0.25% a year |
| Lender financing and placement fees | up to 3.5% (5.5% with bonds) |
| HUD inspection fee | $1,500, $30 a unit, or 1% of repairs if higher, depending on repair scope |
| Third-party reports | appraisal, capital needs assessment, Phase I environmental (mortgageable) |

Third-party report costs sit outside the 3.5% cap and can be financed. The [fees guide](/learn/hud-loan-fees/) works through a full example.

## Prepayment: the five-year rule

The National Housing Act bars prepaying a 223(f) loan for five years after endorsement unless HUD approves, and HUD ties that approval to the property staying rental housing for the rest of the five years. A [223(a)(7)](/programs/223a7/) refinance of the same loan is allowed. After year five, the penalty is whatever the Ginnie Mae security or bond carries, typically a schedule that steps down each year. Run yours in the [prepayment calculator](/tools/prepayment-calculator/).

## Eligibility in short

- 5 or more units on one site, rented for 30 days or longer; no hotel services.
- Certificate of occupancy at least three years old and 85% occupied, or newer and already at the program's coverage.
- Recently built **build-to-rent** communities qualify since Mortgagee Letter 2026-12 when the certificate of occupancy is under three years old.
- Not eligible: properties that need substantial rehabilitation, group homes, meal-service projects. Manufactured home communities qualify only through HUD's separate 2024 program.
- Acquisitions by buyers with no multifamily track record are generally not approved.
- Every principal files a previous participation certification (Form HUD-2530).

## How the process runs

1. **Lender and sizing.** A HUD MAP-approved lender sizes the deal and orders the appraisal, capital needs assessment and Phase I.
2. **Firm application.** The lender submits the full package to HUD with the application fee. 223(f) skips the pre-application stage that construction loans need.
3. **Firm commitment.** HUD's underwriter approves the loan and issues a commitment. It can be extended to 180 days in total, then by up to 60 more days with HUD headquarters approval.
4. **Rate lock and closing.** The lender sells a Ginnie Mae security, locks the rate and closes; HUD endorses the note.

HUD does not publish an official end-to-end processing time. The [timeline guide](/learn/hud-loan-timeline/) explains where the months go and what speeds a file up.

## 223(f) against the alternatives

Against Fannie Mae and Freddie Mac apartment loans, 223(f) usually wins on leverage, term and amortization (35 years fully amortizing against 10-year balloons) and loses on speed and on the five-year prepayment rule. Against bank debt it wins on rate certainty and recourse. The [side-by-side comparison](/learn/hud-vs-fannie-freddie/) puts the numbers next to each other.

## Questions

### What is the maximum loan-to-value on a HUD 223(f) loan?

87% of appraised value for a market-rate property and 90% for an affordable one (LIHTC-restricted with a rent advantage, or 90% or more of units under rental assistance). HUD raised both by Mortgagee Letter 2025-03 in January 2025. The printed MAP Guide still shows the older 85% and 87% figures.

### Can I take cash out with a 223(f) refinance?

Yes, within limits. Cash-out is capped at the greater of 80% of value or the actual cost to refinance, and the loan must still pass every other sizing test. That 80% test was not changed in 2025.

### How soon can a 223(f) loan be paid off?

Not in the first five years after endorsement unless HUD agrees, which the statute ties to keeping the property as rental housing for the rest of that period. A 223(a)(7) refinance of the same loan is not barred. After year five, any prepayment penalty comes from the loan's Ginnie Mae security or bond terms, commonly a declining percentage.

### Does a property need to be stabilized?

Generally the certificate of occupancy must be at least three years old and occupancy at least 85%. Newer properties can qualify once they reach the program's debt service coverage, with extra conditions such as holding back half of any cash-out for six months.

### Is a 223(f) loan recourse?

No. The borrowing entity is liable, but the principals are not personally liable for repayment. They are liable for specific bad acts set out in the HUD regulatory agreement, such as fraud or misusing project funds.

## Sources

- [HUD Mortgagee Letter 2025-03, Multifamily changes in DSCR and LTV/LTC (Jan. 8, 2025)](https://www.hud.gov/sites/dfiles/OCHCO/documents/2025-03hsgml.pdf)
- [90 FR 45789, Changes in Mortgage Insurance Premiums for FHA multifamily programs (Sept. 23, 2025)](https://www.govinfo.gov/content/pkg/FR-2025-09-23/pdf/2025-18379.pdf)
- [HUD MAP Guide, Handbook 4430.G, 2020 edition, chapter 3.7 (Section 223(f))](https://www.hud.gov/sites/dfiles/OCHCO/documents/4430GHSGG.pdf)
- [12 U.S.C. 1715n(f), Section 223(f) of the National Housing Act](https://www.law.cornell.edu/uscode/text/12/1715n)
- [HUD Mortgagee Letter 2026-05, high cost percentages and CY2026 thresholds](https://www.hud.gov/sites/default/files/hudclips/documents/2026-05hsgml.pdf)
- [HUD Mortgagee Letter 2026-12, build-to-rent underwriting eligibility](https://www.hud.gov/sites/default/files/hudclips/documents/2026-12hsgml.pdf)
- [Annual indexing of statutory mortgage limits, CY2026 (91 FR 24597, FR Doc. 2026-08795)](https://www.govinfo.gov/content/pkg/FR-2026-05-06/pdf/2026-08795.pdf)
- [HUD, Multifamily FHA insured mortgages, active file](https://www.hud.gov/hud-partners/multifamily-fhasl-active)

## Related

- https://hudmultifamily.loan/programs/223a7/
- https://hudmultifamily.loan/programs/221d4/
- https://hudmultifamily.loan/tools/223f-loan-sizer/
- https://hudmultifamily.loan/learn/hud-mip/
- https://hudmultifamily.loan/learn/statutory-limits/
- https://hudmultifamily.loan/learn/hud-loan-timeline/
- https://hudmultifamily.loan/learn/hud-vs-fannie-freddie/
- https://hudmultifamily.loan/assumable/
- https://hudmultifamily.loan/learn/secondary-financing/
- https://hudmultifamily.loan/learn/commercial-space-in-hud-loans/
- https://hudmultifamily.loan/learn/hud-property-insurance-requirements/

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Data and API for agents: https://hudmultifamily.loan/agents/ · https://hudmultifamily.loan/llms.txt