Federal programs & compliance
FHA 221(d)(4)
FHA mortgage insurance for new construction and substantial rehab of rental housing — non-recourse construction-to-perm debt, up to 40-year amortization.
Definition
Section 221(d)(4) of the National Housing Act is FHA's insurance program for new construction and substantial rehabilitation of multifamily rental housing: one closing funds construction and converts to a fully amortizing permanent loan of up to 40 years — non-recourse, fixed-rate and assumable — originated by MAP-approved lenders and insured by HUD under the FHA multifamily regulations.
Underwriting follows the MAP Guide, with leverage and debt-service-coverage tiers that loosen as affordability deepens, and Davis-Bacon prevailing wages apply to the construction work by statute.
Why it matters in an underwrite
For small sponsors, 221(d)(4) is the cheapest long-dated fixed-rate construction debt available — bought with process: MAP underwriting and HUD review stretch the timeline well past bank debt, Davis-Bacon wages reprice the GC contract, a mortgage insurance premium rides the balance, and HUD asset-management rules follow the loan for its life. It pencils best where the deal was already paying prevailing wages or where the leverage and 40-year amortization carry the economics.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.