Home / Program Offices / Housing / Multifamily / Programs / Program Section 220
Mortgage Insurance for Rental Housing for Urban Renewal and Concentrated Development Areas: Section 220

Section 220 insures loans for multifamily housing projects in urban renewal areas, code enforcement areas, and other areas where local governments have undertaken designated revitalization activities.

Section 220 insures lenders against loss on mortgage defaults. Section 220 provides good quality rental housing in urban areas that have been targeted for overall revitalization. Section 220 insures mortgages on new or rehabilitated housing located in designated urban renewal areas, and in areas with concentrated programs of code enforcement, and neighborhood development.

Type of Assistance:
FHA mortgage insurance for HUD-approved lenders.

Eligible Activities:
Insured mortgages may be used to finance construction or rehabilitation of detached, semi-detached, row, walk-up, or elevator type rental housing or to finance the purchase of properties which have been rehabilitated by a local public agency. Properties must consist of two or more units and must be located in an urban renewal area, in an urban development project, code enforcement program area, urban area receiving rehabilitation assistance as a result of natural disaster, or area where concentrated housing, physical development, or public service activities are being carried out in a coordinated manner.

The program has statutory mortgage limits, which may 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 debt service limitations. The maximum amount of the mortgage loan may not exceed 90 percent of the estimated replacement cost for new construction. For substantial rehabilitation projects, the maximum mortgage amount is 90 percent of the estimated cost of repair and rehabilitation and the estimated value of the property before the repair and rehabilitation project. The maximum mortgage term is 40 years, or not in excess of three-fourths of the remaining economic life of the project, whichever is less. Contractors for new construction or substantial rehabilitation projects must comply with prevailing wage standards under the Davis-Bacon Act.

Eligible Borrowers:
Eligible mortgagors include private profit motivated entities, public bodies, and others who meet HUD requirements for mortgagors.

Eligible Customers:
All families are eligible to occupy a dwelling in a structure where the mortgage is insured under the program, subject to normal tenant selection.

Section 220 is eligible for Multifamily Accelerated Processing (MAP). For new construction and substantial rehabilitation loans, the sponsor works with the MAP-approved lender who submits required exhibits for the pre-application stage. HUD reviews the lender's exhibits and will either invite the lender to apply for a Firm Commitment for mortgage insurance, or decline to consider the application further. If HUD determines that the exhibits are acceptable, the lender then submits the Firm Commitment application, including a full underwriting package, to the local Multifamily Region for review. The application is reviewed to determine whether the proposed loan is an acceptable risk. Considerations include market need, zoning, architectural merits, capabilities of the borrower, availability of community resources, etc. If the project meets program requirements, the Multifamily Region issues a commitment to the lender for mortgage insurance.

Applications submitted by non-MAP lenders must be processed by HUD field office staff under Traditional Application Processing (TAP). The sponsor has a pre-application conference with the local HUD Multifamily Region to determine preliminary feasibility of the project. The sponsor must then submit a site appraisal and market analysis application (SAMA) (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. If the proposed project meets program requirements, the local Multifamily Region issues a commitment to the lender for mortgage insurance.

Technical Guidance:
This program is authorized by Section 220(a) and (h), National Housing Act (12 U.S.C. 1715k. Regulations are in 24 CFR 200 et seq., 24 CFR 220.1 et seq. The basic program instructions are in HUD Handbook 4555.1. - Rental Housing in Urban Renewal Areas for Project available on HUDclips. Refer to the MAP web site for guidelines, instructions, lender approval requirements, and MAP coordinators. The program is administered by the Office of Multifamily Housing Programs, Office of Production, Program Administration Division.

Program Accomplishment: In FY2023, the Department insured mortgages for 2 projects with 398 units, totaling $66 million.

If you have questions regarding local projects/ properties proposals, financing or housing assistance, please click this link to find your closest local HUD Office and their Multifamily Production contacts.

If you have questions about HUD programs, policies and guidance in the MAP Guide, please click this link to use the HUD Exchange, "Ask A Question" form.

Last Updated: 10/11/2023


Last Updated: 10/11/2023