The HUD 221d4/221d3/220 program provides non-recourse construction and permanent financing for affordable housing properties, or substantial rehabilitation for existing affordable housing properties.

HUD defines Affordable Housing as:

• projects that have a recorded regulatory agreement in effect for at least 15 years after final endorsement; or
• projects that meet at least the minimum LIHTC restrictions of 20% of units at 50% of the Area Median Income (AMI), or 40% with economic rents (portion paid by tenants) on those units no greater than LIHTC rents; or
• Mixed income projects if the minimum low income unit rent and occupancy restrictions and regulatory agreement meet above criteria.

Market rate properties qualify for 83.3% LTV, 87% for Affordable, and 90% for projects that have 90% or greater of their units with rental assistance.
Typically, the 221d4/221d3/220 program takes about 6 months to complete, and provides the best terms available for construction and rehabilitation projects. Under the program, borrowers can utilize a variety of credits to mitigate the equity requirement which could potentially increase the LTV to 90%+ for market rate properties.

Creative Solutions

Main Spring Real Estate Services has extensive experience developing finance solutions for affordable housing projects throughout the United States, including:

• 202 Programs
• 236 Loans
• 9% & 4% Tax Credits
• New Market Tax Credits
• Tax Exempt Bond Financing

Often times, we need to meld subordinated loans or grants with the programs to fill critical equity gaps. Our direct HUD programs can be used to fund capital improvements, replacement reserves and to add supportive services. In addition we have extensive experience repositioning 236 properties that may need to be decoupled and/or maturing through either the Markup to Market or Markup to Budget programs.

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