The threshold – now raised to $120M from $75M – offers greater flexibility for lenders when underwriting multifamily large loans.
WASHINGTON – The Federal Housing Administration (FHA) published a Mortgagee Letter that increases the threshold at which a multifamily loan is considered a large loan from $75 million to $120 million. It’s the first increase in the threshold since 2014 and will enable a greater number of transactions to use standard underwriting processes when submitted for FHA multifamily insurance.
FHA also said it will review the threshold on an annual basis, with the possibility of increasing it in $5 million increments if warranted. The changes are designed to simplify underwriting for multifamily housing development without presenting undue risk to FHA, and to provide for regular adjustments to the threshold so it does not unduly lag market changes.
“We know that borrowers are contending with the dual challenges of increased development costs and meeting the nation’s dire need for more rental housing,” says Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon. “Anything we can do to prudently alleviate extra steps in obtaining FHA insurance will help all of us meet the housing supply challenges before us.”
“Revising the threshold, which is almost a decade old, is an important step for us and for the industry,” adds Deputy Assistant Secretary for Multifamily Housing Ethan Handelman. “We want stakeholders to be able to rely on FHA-insured financing for a wide variety of multifamily transactions, and without unnecessary barriers.”
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