FHA Eliminates the “Three-Year Rule”

HUD’s Office of Multifamily Housing published a Housing Notice (HN) & Mortgagee Letter (ML) called Revision of the Section 223(f) Policy Requiring Three Years of Post-Construction Sustained Occupancy. This new policy will allow newly constructed or substantially rehabilitated projects to refinance under Section 223(f) without a three-year waiting period. Long advocated for by NH&RA, this change will open up additional construction and tax-exempt financing options to borrowers while facilitating a path to long-term FHA permanent financing.

This HN & related ML supersede previous guidance concerning the time elapsed between construction completion and the date of an application for Section 223(f) mortgage insurance. Project eligibility is defined in the notice, and waivers are no longer needed.