HUD Launches Express Lane for LIHTC Multifamily Construction Loans

The U.S. Department of Housing and Urban Development (HUD) has established an expedited review pathway for Federal Housing Administration (FHA)-insured construction loans supporting eligible Low-Income Housing Tax Credit (LIHTC) multifamily projects, according to a mortgagee letter. The LIHTC express lane aims to shorten review cycles for experienced development teams pursuing Section 221(d)(4) New Construction Loans, setting a goal to complete underwriting review and closing within 30 days. The updated guidelines eliminate the previous cap of 200 units or fewer, permit new construction for 4% LIHTC transactions with tax-exempt bonds alongside 9% transactions, restore the standard 80% loan-to-cost threshold, and remove the required 25% deferred developer fee. Baseline loan sizing and underwriting criteria remain governed by the Multifamily Accelerated Processing Guide. To qualify, developments must feature LIHTC-restricted rents, but cannot include Section 8 Project-Based rental assistance or environmental risk factors demanding extensive HUD review. The policy also outlines specific experience qualifications for developers, general contractors, architects, and management agents.

Key takeaways

• HUD established an express lane for FHA Section 221(d)(4) LIHTC construction loans, aiming for underwriting review and closing within 30 days.
• The initiative removes the 200-unit project size limit, allows 4% bond-financed and 9% tax credit projects, and restores an 80% loan-to-cost ceiling while eliminating the 25% deferred developer fee.
• Qualifying projects must exclude Section 8 Project-Based rental assistance and extensive environmental risks, while project teams must satisfy explicit experience thresholds.