This week, the Federal Housing Administration (FHA) announced an increase in the threshold at which a multifamily loan is considered a “large loan,” from $75 million to $120 million. According to the FHA, this will enable more transactions to now use standard underwriting criteria.
The FHA issued a Mortgagee Letter on June 28 outlining the revisions to large loan risk mitigation, emphasizing that this was the first such increase in the limit since 2014. Additionally, the FHA indicated it would review the threshold annually with the potential to increase it in $5 million increments if warranted.
In its announcement, the FHA notes that “the changes are designed to simplify underwriting for multifamily housing development without presenting undue risk to FHA.”
“With this change, borrowers on large-scale projects may more easily qualify for standard FHA underwriting requirements, which is critical today in the face of rising construction costs and other barriers that multifamily developers and investors face in their efforts to deliver and maintain quality multifamily housing,” said Nikhil Kanodia, head of FHA lending at Greystone.
Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said, “We know that borrowers are contending with the dual challenges of increased development costs and meeting the nation’s dire need for more rental housing. Anything we can do to prudently alleviate extra steps in obtaining FHA insurance will help all of us meet the housing supply challenges before us.”
As the #1 multifamily and healthcare HUD lender*, Greystone is poised to assist borrowers in leveraging the highly favorable HUD-insured financing platform that includes the longest loan terms (30-35 years+) and lowest rates in today’s market.
*For HUD’s 2022 fiscal year. Based upon combined firm commitments received by Greystone Funding Company LLC and Greystone Servicing Company LLC and excludes risk sharing and hospital loans.