FHA 223(f): buying or refinancing an existing property

A 223(f) loan is FHA insurance on a fixed-rate, fully amortizing loan of up to 35 years to buy or refinance an existing apartment property. Market-rate properties can borrow up to 87% of value at 1.15 debt service coverage; affordable and heavily assisted ones up to 90% at 1.11. The annual mortgage insurance premium is 0.25%.

Who qualifies

The property has to be built and running.

The standard case (MAP Guide 3.7.2): a certificate of occupancy at least three years old, stable occupancy of at least 85% and stable operating results. Underwriters look for six months of stable occupancy before the firm commitment application (MAP Guide 7.8.9).

Newer properties can apply once they have run at the program’s coverage ratio for a full month. They carry more paperwork, must hold that coverage for three months before endorsement, and if they take cash out, half the cash sits in a debt service reserve until they show six months at the required coverage.

How big the loan can be

HUD runs several tests and lends the lowest:

• Statutory limit: per unit by bedroom count, times the area’s high-cost percentage. For 2026 that is 270% in the contiguous states and 405% in Alaska, Hawaii, Guam and the U.S. Virgin Islands. See the full limits table.
• Loan to value: 87% market rate, 90% affordable or 90%+ rental assistance (Mortgagee Letter 2025-03).
• Debt service coverage: 1.15 market rate, 1.11 affordable or assisted, with mortgage insurance counted as debt service.
• Acquisition cost: on a purchase, the same ratio applied to the purchase cost.
• Cash out: on a refinance, no more than the greater of 80% of value or the cost to refinance.

Loans of $130 million or more (the 2026 threshold) use tighter large-loan ratios. The sizer runs all of it.

Repairs

223(f) allows repairs, not reconstruction. If the total construction cost passes HUD’s aggregate cost limit, $20,406 per unit times the high-cost percentage in 2026 (about $55,100 a unit at 270%, more in the 405% areas), the deal is substantial rehabilitation and belongs in 221(d)(4). Critical life-safety items are fixed before endorsement; the rest can be escrowed and finished after closing (MAP Guide 3.7.5).

Costs

0.25% annual MIP and 0.25% up front, for applications submitted or amended on or after October 1, 2025 (90 FR 45789). HUD’s application fee is 0.30% of the loan. Lender financing and placement fees are capped at 3.5% of the loan, or 5.5% in a bond deal (MAP Guide 3.1.11). Davis-Bacon prevailing wages don’t apply to 223(f) repairs.

Time and paperwork

A 223(f) runs through a HUD-approved MAP lender and HUD’s own review, with a third-party appraisal, physical needs assessment and environmental report. In return the loan is fixed-rate, fully amortizing over as long as 35 years, and non-recourse apart from the standard carve-outs.