All Forum Posts by: Daniel Guiney

Hello Daniel,

There are two distinct FHA programs one for Single Family Homes (homes up to 4 units) and Multifamily (5+ units). Just like SFH, Multifamily FHA loans require a much smaller down payment than any other program, allowing up to 85% Loan to Value ratio (not as aggressive as 96.5% for SFH but much better than the almost standard 75% LTV for apartment loans). However, because the loans are commercial, the due diligence process is much longer and intensive than on a Single Family Property, requiring an appraisal, environmental study, property condition and some other case-by-case reports like Lead Based Paint, Asbestos and Radon. This means that for lender to make sense to go through all of those steps the ultimate loan amount would need to be over $1,500,000.

In terms of the commercial ground floor, there are several programs but the most popular that you would use for acquisition (223(f)), allows up to 25% of net rentable area and up 20% of effective gross income to come from the commercial portion.

To keep the summary above brief, I assumed that the conditions above are a starting point for most properties, when certain other conditions are present for example if the property is "Affordable" the LTV can go up to 87% or 90% for projects covered under Section 8 HAP Contract. Alternatively, commercial income can be increased to 25% of EGI, if the project falls under Section 202 (properties in the urban renewal areas), etc.