USDA MULTIFAMILY/ Primary home Loan guarantree expert needed

3 Replies

Hi there,

I am looking at financing a very unique property. Currently it is 6 units on 22 acres in a Designated rural area of Southern Florida. I am intrigued with the USDA loan guarantee programs. I can only find info on the single family program other than on the USDA website. Does anybody have any details on the Multifamily side and what it required to qualify for this program? I am curious which would be easier, as I will be living there, and could convert to 4 units for the single family designation but preferably would keep as 6 units for rental income. 

Are there any lenders who know both these programs in Florida? Thanks!

Originally posted by @Caroline Rusher :

Hi there,

I am looking at financing a very unique property. Currently it is 6 units on 22 acres in a Designated rural area of Southern Florida. I am intrigued with the USDA loan guarantee programs. I can only find info on the single family program other than on the USDA website. Does anybody have any details on the Multifamily side and what it required to qualify for this program? I am curious which would be easier, as I will be living there, and could convert to 4 units for the single family designation but preferably would keep as 6 units for rental income. 

Are there any lenders who know both these programs in Florida? Thanks!

 Here's the USDA multifam website, but really you want to talk to a commercial lending expert. 

@Caroline Rusher - I am looking at the same program and am having difficulties piecing all of the information together myself.  What I know so far is that the USDA does have a Guarantee Program (section 538) as you mentioned, for acquiring or building low income multi family (5+ units) properties, almost all of which have some sort of Low income housing tax credit (LIHTC) .  These loans seem to fill the gap for urban areas with lower populations that many commercial lenders wont touch.

BonneVille Multifamily Capital is the number one provider for these types of loans which take a bit longer to close

The requirements from their site: https://bmfcap.com/usda-loan-program/

Does your project qualify?

  • Project must reside in an eligible rural area (generally a population of 35,000 or less)  ( Check USDA Eligibility
  • Tenant income cannot exceed 115% of the area median income (AMI)
  • Monthly rent per unit may not exceed 30% of 115% of adjusted AMI and, overall average rents may not exceed 30% of 100% of adjusted AMI
  • Minimum term/amortization 25 years, max term/amortization 40 years, or any combination thereof
  • Maximum 90% loan-to-restricted-rent-value (97% for non-profit)
  • Maximum 70% loan-to-cost (no loan-to-cost restriction for USDA 515 acq/rehabs)
    • Virtually all 538 loans are done in conjunction with LIHTC
  • Minimum 1.15 all-in debt service coverage
  • Typical prepayment provision is 10% penalty in year one, declining 1% annually
  • Equity requirement of at least 10% of total development cost (3% for non-profit)
  • Rehab of at least $6500/unit—project must have at least 5 rental units)

You might also look at Bellwether Enterprise Real Estate Capital and Churchill Stateside Group as another source of information.

Good Luck!