federal housing administration (FHA) this week published Mortgage Letter (ML) 2023-14, which increases the limit for multifamily loans to be considered large loans from $75 million to $120 million.
This is the first major increase in the limit since 2014. The goal of the increase, the agency said, is to “enable a greater number of transactions to use standard underwriting procedures when presenting for FHA multifamily insurance.”
The FHA said it will also review the limit on an annual basis, leaving open the possibility of future increases of $5 million.
The changes to the review schedule and loan limits are designed to “simplify underwriting for multifamily housing developments without presenting undue risk to the FHA,” the agency said, and to allow for regular adjustments in response to market changes.
“We know borrowers are grappling with the dual challenges of rising development costs and meeting the nation’s dire need for more rental housing,” said FHA Commissioner Julia Gordon. “Anything we can do to judiciously reduce the extra steps in obtaining FHA insurance will help us all meet the housing supply challenges before us.”
Another driver was the age of the limit, which was about a decade older before the increase, according to Ethan Handelman, deputy assistant secretary for multifamily housing.
“Revising the nearly decade-old limit is an important step forward for us and the industry,” he said. “We want stakeholders to be able to rely on FHA-insured financing for a variety of multifamily transactions, and without unnecessary hassles.” be able to.”
New ML includes page revisions [Multifamily Accelerated Processing (MAP)] guide to reflect the new $120 million limit and annual review methodology,” the agency said. “The FHA’s other requirements in the MAP guide related to large loans remain unchanged.”
