What Are The Costs To Fund A HUD 221(d)(4) Loan?

HUD 221(d)(4) provides some of the best terms on the market. However the loan has several costs to close.
The following provides an overview of the typical out of pocket expenses required of borrowers prior to closing for a HUD new construction/rehab transaction. It is important to note that all of the below fees are mortgageable and credited as a pre-paid expense (or reimbursed to borrower) at time of closing.
Costs can also vary depending upon the size and scope of a project.

Third Parties
Third Parties Description Average Cost
Appraisal $8,000
Market Study $7,500
Energy Benchmarking Optional report, only secured when property
desires “Green” HUD MIP benefits.$7,500
Phase 1 Environmental review. $3,750
CNA eTool Needs assessment. $4,000
ALTA Survey: Varies
Soils/Geotech Report/Radon : Varies
Architectural & Cost Review
The last report secured at final stage of HUD process. This is an independent engineering
review of all complete plans, specs, construction docs, and costs. $15,500

HUD Exam Fee 0.30% of mortgage amount.
For construction / rehab, the underwriting process is typically completed in two stages.
Thus the fee is typically 0.15% due at first stage, and 0.15% due at final stage.

Other HUD Fees (Paid at Closing)

HUD Mortgage
Insurance Premium
0.25% of mortgage amount for fully subsidized (affordable) or energy efficiency properties.
0.35% for properties that meet LIHTC rent restrictions.
0.65% of mortgage amount for market rate housing (that is not energy efficient per HUD
guidelines).
MIP “due” during construction is
built into the loan. Drawn from mortgage proceeds.

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