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HUD 221(d)(4) loan sizer
Sizes a HUD 221(d)(4) construction or substantial-rehab loan with the 2026 rules: loan to cost, debt service coverage with 0.25% MIP, and the per-unit statutory limit, with construction interest and MIP solved into the cost.
Largest 221(d)(4) loan at these numbers
$57,877,308Set by: Statutory limit
The per-unit statutory limit binds. A lender can ask HUD for the 315% project-by-project high cost percentage, and Congress raised the base amounts in July 2026 (HUD has not implemented them yet).
- Total replacement cost
- $70,208,958
- Equity needed (cost minus loan)
- $12,331,650
- Loan to cost
- 82.4%
- Permanent payment: P&I and MIP, monthly
- $318,488
- Debt service coverage at stabilization
- 1.20x
- Loan per unit
- $263,079
- Ratios applied
- 87% LTC, 1.15x DSCR
| Test | Supports |
|---|---|
| Loan to costCriterion 3: 87% of replacement cost, incl. carry and fees | $61,354,020 |
| Statutory limit bindingCriterion 4: 2026 221(d)(4) per-unit limits x 270% | $57,877,308 |
| Debt service coverageCriterion 5: stabilized NOI / 1.15x, P&I plus 0.25% MIP | $60,575,164 |
Construction period and closing
- Construction interest (estimate)
- $3,299,007
- MIP at initial endorsement (2 years x 0.25%)
- $289,387
- HUD application fee (0.30%)
- $173,632
- HUD inspection fee (0.50%)
- $289,387
- Lender financing and placement fees
- $1,157,546
- Working capital escrow (4%, not in cost)
- $2,315,092
Estimate, not a quote. HUD, the lender and the appraisal decide the real numbers; Janover Capital is an advisor, not a lender, and is not affiliated with HUD or FHA.
Reading the results
- Largest 221(d)(4) loan
- The lowest amount the three HUD tests allow (four if you enter a request). One loan funds construction and then becomes the permanent loan at final endorsement; there is no separate takeout.
- Total replacement cost and equity
- Land, hard and soft costs plus, if ticked, the costs the loan itself creates: interest on the average balance drawn, MIP for the construction period, HUD's application and inspection fees and the lender's fees. Equity is that cost minus the loan, before the working capital escrow and any operating deficit reserve the lender requires.
- Permanent payment and coverage
- Level principal and interest over the permanent term plus 0.25% MIP, tested against stabilized NOI. HUD's tests use this permanent payment even though the loan funds construction first.
- MIP at initial endorsement
- The annual 0.25% premium for each year of construction, rounded up to whole years and financed in the loan.
- Working capital escrow
- 4% of the loan for new construction (half of it a construction contingency) or 2% for substantial rehab, deposited by the borrower at initial endorsement. It is cash you need, but it is not part of the cost HUD lends against.
The worked example
220 new elevator units (100 one-bedrooms, 100 two-bedrooms, 20 three-bedrooms), market rate, $6,000,000 of land, $52,000,000 of hard costs and $7,000,000 of soft costs, a 24-month build, 5.7% over 40 years and $4,600,000 of stabilized NOI. The binding test is statutory limit: $57,877,308, leaving $12,331,650 of equity. At the 315% project-by-project percentage the loan would be $57,877,308, set by statutory limit. That gap is the reason Congress rewrote the statutory amounts in 2026.
How the calculator works
HUD sizes 221(d)(4) loans on form HUD-92264-A and the lowest criterion controls (MAP Guide 3.3). The ratios in force on October 30, 2026:
| Tier | Max loan to cost | Min DSCR | Large loan ($130M+) |
|---|---|---|---|
| Market rate | 87% | 1.15x | 75% / 1.30x |
| Affordable (LIHTC, 10%+ rent advantage) | 90% | 1.11x | 80% / 1.25x |
| 90%+ rental assistance | 90% | 1.11x | 87% / 1.15x |
| Middle Income (ML 2026-01) | 90% | 1.11x | not set by HUD |
- Loan to cost. Loan = ratio × (land + hard + soft + loan × carry rate). The carry rate is interest (rate × months ÷ 12 × average draw) + 0.25% × construction years + 0.30% application fee + 0.50% inspection fee + lender fees, so the formula solves to ratio × costs ÷ (1 − ratio × carry rate). For substantial rehab the inspection fee is 0.50% of the improvement cost instead.
- Statutory limit. Units by bedroom × HUD's CY2026 221(d)(4) limit (elevator or not) × the high cost percentage (ML 2026-05). It does not apply the ROAD to Housing Act amounts, which HUD has not implemented.
- Debt service coverage. Loan = NOI ÷ DSCR ÷ (12 × monthly payment per dollar + 0.25%).
- Large loans. $130,000,000 and up uses ML 2023-14's construction table; ML 2025-03 did not change it, as we read it.
Left out: BSPRA/SPRA allowances, land-value limits, Section 220 commercial rules, the absorption-period operating deficit escrow, and the deductions the 92264-A makes for grants, gifts, tax abatements and secondary loans. The default rate is the median note rate on 221(d)(4) loans HUD endorsed from 2025-09-28 to September 30, 2026 (152 loans in HUD's active file), not a rate on offer.
Sources
- HUD Mortgagee Letter 2025-03, DSCR and LTV/LTC changes (Jan. 8, 2025)
- HUD Mortgagee Letter 2026-01, Middle Income option for 221(d)(4) (Jan. 22, 2026)
- HUD MAP Guide, Handbook 4430.G, 2020 edition (effective Mar. 18, 2021)
- HUD Mortgagee Letter 2023-14, large loan risk mitigation (June 28, 2023)
- HUD Mortgagee Letter 2026-05, CY2026 high cost percentages and thresholds (May 20, 2026)
- Annual indexing of basic statutory mortgage limits, CY2026 (FR Doc. 2026-08795, May 6, 2026)
- 90 FR 45789, FHA multifamily MIP changes, applications on or after Oct. 1, 2025 (Sept. 23, 2025)
- Public Law 119-101, 21st Century ROAD to Housing Act, sec. 211 (July 11, 2026)
- HUD, Multifamily FHA insured mortgages, active file
Rules 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
How much will HUD lend on a 221(d)(4) construction loan?
The lowest of: 87% of the replacement cost for a market-rate project (90% for affordable, 90%+ assisted or Middle Income), the amount stabilized NOI supports at a 1.15x debt service coverage (1.11x for those tiers) including 0.25% MIP, and the per-unit statutory limit times the high cost percentage. Mortgagee Letter 2025-03 set those ratios in January 2025.
Why do statutory limits bind on so many 221(d)(4) deals?
The CY2026 per-unit limits start at $68,401 for a non-elevator studio and $146,274 for an elevator four-bedroom, multiplied by 270% in most of the country. Construction costs in many markets exceed that. Congress raised the base amounts about fourfold in the ROAD to Housing Act on July 11, 2026, but HUD has not yet published the implementing notice.
How is MIP paid during construction?
For loans insuring advances, the upfront premium is the annual MIP for the whole construction period, rounded up to whole years, and it is capitalized into the loan (90 FR 45789). At today's 0.25% rate, a 24-month build means 0.50% of the loan at initial endorsement.
Does Davis-Bacon apply?
Yes. Prevailing wages under Davis-Bacon apply to 221(d)(4) new construction and substantial rehabilitation, with weekly certified payrolls. They do not apply to 223(f) or 223(a)(7) loans.
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