Home / Program Offices / Housing / Multifamily / Programs / purchrefi223a7
Mortgage Insurance for Purchase for Refinancing of Existing Multifamily Rental Housing: Sections 223(a)(7)

Section 223(a)(7) insures mortgage loans to facilitate the refinancing of certain mortgages currently insured by FHA and to HUD-held loans on projects subject to the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA).  A mortgage refinanced pursuant to Section 223(a)(7) is insured under the same section of the National Housing Act (NHA) as was the mortgage originally insured under that section of the act, for example, Section 221(d)(4) or Section 223(f).

Section 223(a)(7) insures lenders against loss on mortgage defaults. The term of a new mortgage insured pursuant to Section 223(a)(7) may be extended up to 12 years beyond the maturity date of the existing, originally insured mortgage.  The term cannot be extended beyond 75% of the remaining useful life of the project or the maximum term permitted in the section of the act under which the existing mortgage is insured. If the existing mortgage is the result of a previous refinancing through Section 223(a)(7), the longest allowable maturity date of the new mortgage is 12 years beyond the maturity date of the mortgage originally insured under the FHA insurance program but not to exceed 75% of remaining useful life.  Section 223(a)(7) refinances typically reduce project debt service and increase cash flow by lowering the interest rate of the mortgage and/or by extending the amortization period.  The increased project cash flow benefits properties and owners and reduces risk to the FHA Insurance Fund.

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

Eligible Activities:
The refinancing is limited to existing properties in residential use, and cannot include new construction or expansion of the height or footprint of an existing building, or any repairs, which involve ground disturbance.   Proceeds may be used to fund (a) the payoff of existing FHA-recognized indebtedness (b) the cost of refinancing, (c) the cost of critical and non-critical repairs (as described in the required Capital Needs Assessment, subject to the cost limits as described in the 2016 Map Guide), and (d) deposits to reserve for replacement accounts.  By statute, equity take-outs are not permitted under Section 223(a)(7).

Mortgages excluded from the Eligible Activities:
Risk Share mortgages

Co-insured mortgages

Section 202 loans and other HUD-held mortgages (other than those subject to a debt restructuring under the Multifamily Assisted Housing Reform and Affordability Act (MAHRA)

Refinance Processing:
For Maximum mortgage calculations refer to Chapter 18.3.B of the 2016 Map Guide and HUD Form- 92264-A Criteria 1,2,5 &10.  The mortgage amount may not exceed the lowest applied criteria.

Eligible Borrowers:
Both for profit and non-profit borrowers are eligible to apply.

Eligible Customers:
All persons are eligible to occupy such projects subject to normal occupancy restrictions.

Section 223(a)(7) is eligible for Multifamily Accelerated Processing (MAP).  The sponsor works with the MAP-approved lender who submits required exhibits for a Firm Commitment application, including an underwriting package to the local Multifamily Region for review.  The Multifamily Regional or Office reviews the application to determine whether the proposed loan is an acceptable risk.  Considerations include the capabilities of the borrower and the benefits to the project.  FHA underwriting analysis must determine that there is enough project income to repay the loan, taking into account all necessary project expenses.  If the proposed refinance meets program requirements, the Regional Center issues a commitment to the lender for mortgage insurance.

Applications submitted by non-MAP lenders must be processed by HUD Multifamily field staff under Traditional Application Processing (TAP).  Under TAP, there is only one processing stage for Section 223(a)(7) applications: the firm commitment stage.  At firm commitment stage the local Regional Office determines the amount of the mortgage available to the refinancing borrower in the proposed transaction.  If the proposal meets FHA program requirements, the local Multifamily Regional Office issues a commitment to the lender for mortgage insurance.

Technical Guidance:
For processing and underwriting instructions refer to the 2016 MAP Guide, Chapter 18.  Refer to the MAP website for guidelines and instructions, lender approval requirements, and MAP coordinators.  The Office of Multifamily Production, Program Administration Division, administers the program.

Program Accomplishments: In FY2023, the Department insured mortgages for 4 projects with 606 units, totaling $91.8 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