FHA SECTION 241 – Multifamily Accelerated Processing (MAP)

Supplemental loans to expand or renovate existing multifamily rental projects already financed with FHA-insured loans.


  • Used when it is not feasible to refinance a project’s FHA-insured loan as part of an addition or renovation because the current loan has a favorable interest rate or because prepayment is still subject to a lock-out.
  • Maximum loan is 90% of FHA’s estimate of the cost of improvements or addition. The term is typically not longer than the remaining term of the existing FHA insured loan, but this is not a statutory requirement.
  • Requires a minimum 1.11 X debt service coverage of the debt service of the combined first and second insured loans.
  • Loan is pre-payable, assumable and non-recourse.
  • Underwriting is generally based on underwriting standards of existing FHA-insured loan program; additions to existing properties generally must be self-supporting from a net operating income standpoint.
  • The supplemental and primary loans typically feature cross-default and cross-collateralization requirements.
  • Requires an allocation of “credit subsidy” from HUD Headquarters which is issued on a year-by-year basis.


0.30% Application Fee to FHA
0.95% Upfront Mortgage Insurance Premium
0.25% or 0.35% Upfront Mortgage Insurance Premium – tax credit/affordable deals; .25% for “green” market rate deals
0.50% Inspection Fee
2.00% Maximum Financing (Origination) Fee
1.50% Maximum Placement Fee
2.00% Costs of Issuance for Tax-Exempt Bond Transactions

An annual 0.95% Mortgage Insurance Premium (.25% or 0.35% for tax credit/affordable deals and .25% for “green” market rate deals) is paid to FHA as part of the monthly mortgage payment.


  • Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan. The amount of the annual deposit will be revised after 10 years based on a capital needs assessment.
  • Operating Deficit and Working Capital Escrows may be required in amounts generally similar to what would be required under the Section 221 (d)(4) program. These escrows must be funded by the borrower at closing with cash or a letter of credit.
Loan Amount Minimum Operating Deficit Escrow
<$25 4-6 months debt service
$25M – $75M 9 months debt service
>$75 M 12 months debt service
>$100 M 12+ months debt service
  • The Working Capital Escrow is equal to 4% of the loan. Half of this escrow (2% of the mortgage) will be dedicated to cover change orders during construction.
  • The lender can recommend, and HUD may approve, waiving the Operating Deficit and Working Capital Escrow requirements when appropriate on specific cases.