Dive Brief:
- HUD has streamlined the process for obtaining Federal Housing Administration-insured construction loan financing for eligible Low-Income Housing Tax Credit multifamily projects, according to a mortgagee letter released Monday.
- The LIHTC express lane aims to make FHA financing more efficient “by reducing processing times for highly experienced and capable LIHTC developers,” per the letter. The updates reduce paperwork and expand project eligibility for Multifamily Section 221(d)(4) New Construction Loans, with the goal of completing the underwriting review and closing process within 30 days.
- “The whole idea is to have HUD move these reviews quickly and expeditiously because these are lower-risk deals,” Frank Cassidy, former FHA commissioner and assistant secretary for housing at HUD, told Multifamily Dive. As affordable housing, “[LIHTC projects are] in HUD's mission, and it's bringing new housing supply online.”
Dive Insight:
The LIHTC update is modeled on the Section 232 Express Lane for senior housing healthcare facilities, released in July 2025, which Cassidy, who is now a senior managing director at Walker & Dunlop, helped enact. “It was a huge success, and we said, ‘Hey, why don't we do something like this with multifamily?’” Cassidy said.
Cassidy also helped develop the LIHTC Express Lane while in office, recognizing that “not every deal needs to go through the same cookie-cutter review process,” he said. LIHTC deals are low-leverage and highly vetted, and “these are typically low loan-to-cost deals because there's so much tax credit equity.”
To qualify, projects must have LIHTC-restricted rents “but cannot include HUD Multifamily Section 8 Project-Based rental assistance because the time involved in determining Section 8 rents is not congruent with an expedited review,” per the letter. Both 4% LIHTC transactions with tax-exempt bonds and 9% LIHTC transactions are eligible.
The LIHTC 221(d)(4) express lane initiative:
- Eliminates the eligible project size limit of 200 units or less.
- Permits new construction of 4% LIHTC transactions with tax-exempt bonds.
- Restores the standard 80% loan-to-cost limit.
- Eliminates the required 25% deferred developer fee.
- Streamlines and limits the deliverables required before the application.
- Reemphasizes the 30-day firm commitment decision timeline.
The letter specifies experience requirements for the development team, general contractor, architect and management agent. Projects with environmental risk factors requiring extensive analysis by HUD are not eligible. HUD's loan sizing and underwriting standards remain the same, as required by the Multifamily Accelerated Processing Guide.
The changes to the senior housing program seem to be paying off, which bodes well for the LIHTC express lane, according to Cassidy.
“Now being in the private sector and done a couple of these [Section 232] deals, we've gotten commitments in like two to three days,” Cassidy said. “I just actually closed two deals in 54 business days from submission to closing, which would have typically been unheard of for HUD.”
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