221(d)(4)
Graco Mortgage provides FHA-insured, long-term, fixed-rate financing for new construction or substantial rehabilitation of multifamily projects nationwide. Graco Mortgage uses the two-stage Multifamily Accelerated Processing Program (MAP) to expedite underwriting and approval.
Loan Term
Construction loan plus up to 40-year permanent loan
Amortization
Up to 40 Years
Maximum Loan Amount
Determined by the lowest of:
1. 83.3% of total eligible development costs (87% for affordable)(90% for 90% project-based rental assistance)
2. 1.20 debt service coverage (1.15 for affordable) (1.11 for 90% project-based rental assistance)
3. HUD?s statutory mortgage limits
4. For rehab add 83.3% of the "as is" value (87% for affordable) plus 83.3% of the total development cost (87% for affordable)
Fixed Rate
Yes - Construction and Permanent
Eligible Property
Multifamily projects to be built or projects undergoing substantial rehabilitation. Detached structures and row houses eligible.
Eligible Borrower
Single Asset Entity (for profit or non-profit)
Occupancy Requirement
Underwritten at a maximum 93% occupancy for Market
95% occupancy for Affordable
Tax and Insurance Escrow
Monthly deposits required
Recourse
Non-recourse - Construction and Permanent
Commercial Space
Maximum 10% of gross floor area and maximum 15% of potential gross income
Prepayment
Negotiable. Generally three year lockout with declining percentage of principal thereafter up to 10 years (7-6-5-4-3-2-1).
Assumable
Subject to Graco Mortgage and HUD approval and payment of assumption fee
Good Faith Deposit
Negotiable based on project type
Expense Escrow
Yes - sufficient to cover expenses and third-party report costs
Origination Fee
Negotiable
HUD Application Fee
Non-refundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD with the firm commitment submission package. For market rate pre-applications, a non-refundable review fee of 15 bps (50% of the firm commitment application fee) is due to HUD with the submission of the pre-application package.
HUD Inspection Fee
0.5% of the mortgage amount for new construction. 0.5% of the cost of the repairs for substantial rehab.
Legal / Closing Fee
Borrower pays Graco Mortgage's counsel fee and miscellaneous closing costs.
Rehabilitation Qualifications
Repairs must exceed $6,500 per unit (adjusted for local high cost factor), 15% of the "as rehabbed" appraised value or replacement of 2 or more major building systems.
Davis Bacon
Davis Bacon labor standards and wage requirements apply to construction and rehab work.
HUD Mortgage Insurance Premium (MIP)
HUD sets the cost of the FHA Insurance. The MIP (.90%) is paid in advance for the construction period and is escrowed monthly (.45%) after amortization commences.
Required Reports
Market Study, Appraisal, Architect/Cost Review and Phase I
Affordable defined as (a) properties that have a recorded regulatory agreement in effect for at least 15 years after final endorsement, (b) properties that meet at least the minimum Low Income Housing Tax Credit (LIHTC) of 20% of units at 50% of the Area Median Income (AMI), or 40% of units at 60% of AMI, with economic rents (i.e. portion paid by tenants) on those units no greater than LIHTC rents, mixed income properties if the minimum low income unit rent and occupancy restrictions and regulatory agreement meet the above criteria (i.e. properties need not use LIHTC?s to be considered affordable so long as they comply with (a) and (b). Rental Assistance defined as properties that have at least 90% of their units supported by a project based rental assistance contract.