HUD has proposed significant improvements to their multifamily finance programs. This involves the rollback of the DSCR and LTC/LTV parameters to more aggressive standards. These proposed changes are still in the draft stage, and there will be an approximate 30-40 day review/comment period before these new parameters become effective. Here is what they’ve proposed.

For Market Rate deals, HUD is proposing to decrease the minimum DSCR to 1.15x...HUD has proposed significant improvements to their multifamily finance programs. This involves the rollback of the DSCR and LTC/LTV parameters to more aggressive standards. These proposed changes are still in the draft stage, and there will be an approximate 30-40 day review/comment period before these new parameters become effective. Here is what they’ve proposed.

For Market Rate deals, HUD is proposing to decrease the minimum DSCR to 1.15x and increase the maximum LTC/LTV to 87%. HUD is also planning to modify the underwriting parameters for affordable deals to a minimum DSCR of 1.11x and a maximum LTC/LTV of 90%. See the new standards in the chart below or attached PDF.

HUD will introduce a “Middle Income” categorization, that would allow some projects to be underwritten at the most favorable 1.11x DSCR and 90% LTC, without requiring LIHTC or a project-based Section 8 contract. This category would require 50% of units to be set aside < 120% AMI, secured with a use restriction monitored by a public entity. So far, this new category only applies to the 221(d)(4) program (i.e. new construction and sub-rehab projects). Show more