Dive Brief
- HUD has simplified the process for obtaining FHA-insured construction financing for eligible Low-Income Housing Tax Credit (LIHTC) multifamily projects, as outlined in a mortgagee letter released on Monday.
- The LIHTC express lane aims to enhance efficiency by reducing processing times for experienced developers. The updates streamline paperwork and expand eligibility for Multifamily Section 221(d)(4) New Construction Loans, with a goal of completing underwriting and closing within 30 days.
- According to Frank Cassidy, former FHA commissioner, “The whole idea is to have HUD move these reviews quickly and expeditiously because these are lower-risk deals.”
Dive Insight
The LIHTC update follows the successful model of the Section 232 Express Lane for senior housing healthcare facilities, introduced in July 2025, which Cassidy played a key role in developing.
Cassidy notes that LIHTC deals are low-risk and well-vetted, often with low loan-to-cost ratios due to the significant tax credit equity involved. To qualify, projects must meet specific criteria, including LIHTC-restricted rents and the absence of HUD Multifamily Section 8 Project-Based rental assistance.
LIHTC 221(d)(4) Express Lane Initiative
- Eligible Project Size: Removes the limit of 200 units or less.
- Tax-Exempt Bonds: Allows new construction of 4% LIHTC transactions with tax-exempt bonds.
- Loan-to-Cost Limit: Restores the standard 80% loan-to-cost limit.
- Developer Fee: Eliminates the requirement for a 25% deferred developer fee.
- Application Deliverables: Streamlines and limits the documents needed before application.
- Decision Timeline: Emphasizes a 30-day firm commitment decision.
The letter provides detailed requirements for experience and deliverables from the development team, general contractor, architect, and management agent. Projects with substantial environmental risks that require extensive HUD analysis are not eligible. HUD's loan sizing and underwriting standards remain consistent with the Multifamily Accelerated Processing Guide.
Cassidy observes that the changes to the senior housing program have been successful, boding well for the LIHTC express lane. He shares his experience closing deals promptly, highlighting the program's potential for expediting financing processes.