Section 234(d) insures blanket mortgages for the construction or
substantial rehabilitation of multifamily projects to be sold upon
completion as individual condominium units.
Section 234(d) insures lenders against the loss on mortgage defaults.
The program enables sponsors to develop condominium projects in
which individual units will be sold to home buyers.
Type of Assistance:
FHA mortgage insurance for HUD-approved lenders.
Private profit-motivated developers and other sponsors who meet
FHA requirements for mortgagors.
Families or individuals who are eligible to purchase condominium
units. Mortgages for individual units may be insured under Section
Insured mortgages may be used to finance construction and substantial
rehabilitation of multifamily housing structures where the individual
units will be sold as condominiums under Section 234(c). The program
has statutory per unit mortgage limits which vary according to the
size of the unit, the type of structure, and the location of the
project. There are also loan-to-replacement cost and pre-sale limitations.
Contractors for new construction or substantial rehabilitation projects
must comply with prevailing wage requirements under the Davis-Bacon
The sponsor has a preapplication conference with the local HUD Multifamily
Hub or Program Center to provide general application guidance and
to determine the feasibility of the project before submitting a
site appraisal and market analysis (SAMA) application (for new construction
projects) or feasibility application (for substantial rehabilitation
projects). Following HUD's issuance of a SAMA or feasibility letter,
the sponsor submits a firm commitment application through a HUD-approved
lender for processing. Considerations include, market need, zoning,
architectural merits, capabilities of the borrower, and availability
of community resources. If the project meet program requirements,
the local HUD Multifamily Hub or Program Center issues a commitment
to the lender for mortgage insurance.
The 234(d) program is authorized by the National Housing Act (12
U.S.C. 1715y), as amended; Housing Act of 1964, as amended, Section
234(d). Regulations are found in 24 CFR 234. The basic program instructions
are in HUD Handbook 4580.1- Mortgage Insurance for Condominium Housing
Insured under Section 234(d) available on HUDclips.
The program is administered by the Office of Multifamily Housing
No loans have been insured under this program for several years.
Condominium developers typically obtain their own construction financing
and use FHA insurance under Section 234(c) to finance the sales
of the individual units.