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FHA 221(d)(4) Loans

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Our specialized loan program is tailored to empower developers and investors seeking to create groundbreaking multifamily projects. Explore the limitless possibilities of new construction and substantial rehabilitation with Capital Investors Direct by your side.
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FHA 221(d)(4) Loan Terms and Requirements

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Loan Term & Amortization

Construction loan period (interest-only), followed by 40-year permanent (fully amortizing)

Maximum loan amount

The Lesser of:
1. For market-rate projects, up to 85% of the total eligible development costs are covered. LIHTC restricted projects receive coverage for 87%, while properties with a minimum of 90% rental assistance can access financing for up to 90% of the total eligible development costs.

2. FHA mortgage limits per unit, as defined by statutory regulations, are modified to account for the local high-cost factor.

3. An amount ensuring a minimum debt service coverage is attained, with the following thresholds: a) 1.176x DSC for market rate properties; b) 1.15x DSC for LIHTC restricted; and c) 1.11x DSC for properties with a minimum of 90% rental assistance.

Eligible Properties

Construction of new apartments or extensive renovation of existing apartment properties.

Eligible Borrower

A singular asset entity, whether for-profit or nonprofit.

Underwriting occupancy

The maximum economic underwriting occupancy is as follows:

1. 93% for market-rate properties (comprising at least 20% market-rate units or LIHTC units with rents < 10% below market).

2. 95% for LIHTC restrictions on a minimum of 80% of units, with rents at least 10% below market.

3. 97% for properties with at least 90% rental assistance or 90% LIHTC set aside with rents at least 10% below market.

Tax & Insurance Escrows

Monthly deposits are mandatory.


Nonrecourse for both construction and permanent financing.

Commercial space

Up to 25% of the gross floor area and a maximum of 20% of the effective gross income, with a 20% vacancy rate considered.

Required reports

Required for sub rehab projects are a Market Study, Appraisal, Architect/Cost Review, and Phase I Environmental assessment. Additionally, a CPA-reviewed borrower financial statement from the last fiscal year is essential.


Usually set at 10% in the first year, decreasing by 1% annually; alternative prepayment options may be considered based on market conditions.


Approval from both CID and HUD, as well as the payment of an assumption fee, is required.

Good faith deposit

Subject to negotiation and contingent on the property type and loan size.

Expense escrow

Yes, adequate to cover both CID's expenses and the costs of third-party reports.

Origination fee

Subject to negotiation

HUD application fee

Nonrefundable at 0.3% of the loan amount: 0.15% payable to HUD at pre-application submission and 0.15% at firm application.

HUD inspection fee

0.5% of the mortgage amount is required for projects involving new construction, whereas for substantial rehabilitation projects, the fee is calculated as 0.5% of the total cost of repairs.

Legal/closing fee

The borrower is responsible for covering CID's legal counsel fee and any additional miscellaneous closing costs.

Rehabilitation qualifications

Repairs should surpass $15,000 per unit (adjusted for the local high-cost factor) or involve the replacement of two or more major building systems.

Davis–Bacon Act

Construction and rehabilitation work are subject to Davis-Bacon labor standards and wage requirements.

HUD mortgage insurance premium (MIP)

Annual Mortgage Insurance Premium (MIP) rates are as follows:

1. Market rate properties: 0.65%
2. Affordable properties: 0.35%
3. Broadly affordable or energy-efficient properties: 0.25%

FHA 221(d)(4) financing  Loans & Its Benefits

What is FHA 221(d)(4) Loan?

FHA 221(d)(4) is a specific loan program offered by the Federal Housing Administration (FHA) that provides financing for the new construction or substantial rehabilitation of multifamily properties. The program is designed to encourage the development and improvement of affordable rental housing.

Unlocking Opportunities with FHA® 221(d)(4) Financing

Purposeful New Construction

Capitalize on the potential of new construction projects, from the ground up. Whether you're envisioning modern apartment complexes or vibrant mixed-use spaces, our FHA® 221(d)(4) financing is designed to fuel your innovative ventures.

Revolutionizing Communities through Substantial Rehab

Breathe new life into existing structures with substantial rehabilitation. Transform aging properties into contemporary living spaces, contributing to community revitalization and meeting the demands of today's discerning residents.

Key Feature of FHA 221(d)(4) Loans

This program is particularly beneficial for developers and investors looking to create or improve multifamily housing, including affordable housing options.

New Construction or Substantial Rehabilitation

The program supports the financing of entirely new construction projects as well as significant rehabilitation efforts to improve existing multifamily properties.

Long-Term Fixed-Rate Financing

Borrowers can secure long-term, fixed-rate financing, providing stability and predictability in interest payments over the life of the loan.

Loan-to-Cost (LTC) Ratio

The loan amount is determined based on a percentage of the total development costs, known as the Loan-to-Cost ratio. This ratio helps ensure that the borrower has sufficient financing to cover the expenses associated with the project.

Non-Recourse Financing

FHA 221(d)(4) loans are typically non-recourse, meaning that the borrower's personal assets are not at risk in the event of default.

Affordability Requirements

FHA 221(d)(4) loans often include provisions to promote affordability, such as rent restrictions or requirements for a certain percentage of units to be designated as affordable housing.

HUD Review and Approval

The application process involves a comprehensive review by the U.S. Department of Housing and Urban Development (HUD). Projects must adhere to HUD guidelines and regulations.

Commercial Space Limitations

1. Percentage Limits: Commercial space is typically limited to a maximum percentage of the gross floor area of the property. FHA 221(d)(4) often restricts the commercial space to a specified percentage to ensure that the majority of the property is dedicated to residential use.
2. Income Limits: There may be limitations on the income generated from commercial space. The income from commercial areas should not surpass a certain percentage of the effective gross income of the entire property.
3. Vacancy Allowance: Some FHA 221(d)(4) loans may apply a vacancy allowance to the commercial space. This means that a certain percentage of the commercial space may be considered vacant for underwriting purposes, influencing the income calculations.
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We Cover


States & US Territories

Capital Investors Direct provides commercial hard money loan financing options in the following geographic locations of the United States:


200 MSA Tier I & Tier II Cities

Maryland, Texas, Florida, Utah, Colorado etc. We offer CRE Bridge Loan in top cities like Denver, Chicago, Colorado, San Diego etc.

How it Works?

Capital Investors Direct funds different commercial properties across the country. Below are few commercial properties we lend hard money for –
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Competitive Terms

Access financing with competitive interest rates, optimizing your project's financial feasibility.


Streamlined Process

Capital Investors Direct is committed to efficiency. Our streamlined application and approval process help you move from concept to construction with confidence.


Flexible Terms

Tailor your financing to suit the unique demands of your project. With flexible terms, you have the freedom to structure your loan in a way that aligns with your goals.


Long-Term Stability

Secure long-term fixed interest rates, providing stability and predictability for the duration of your loan.

Blogs & 

Capital Investors Direct funds different commercial properties across the country. Below are few commercial properties we lend hard money for –

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