On Wednesday, June 28, the Federal Housing Administration increased the threshold dollar amount for “Large Multifamily Loans” from $75 million to $120 million, a change NAR and multifamily housing advocates specifically requested just last year. In addition to increasing the threshold, the new policy leaves open the possibility of future annual increases of $5 million. This is the first increase since 2014. This change will increase the number of multifamily loans that are eligible for standard underwriting for FHA insurance – loans above the “Large Loan Threshold” must meet additional requirements. Increasing the threshold by $45 million creates greater flexibility for lenders in this space and will facilitate the creation of more rental housing while also mitigating increased development costs. It also better reflects the risk profile of the borrowers.
In November 2022 NAR and several rental housing coalition partners sent a letter to the FHA requesting that the agency make this specific update to its loan limit thresholds to reflect changes in the market and the need to speed up and encourage multifamily rental development. NAR is pleased that the FHA has made this common-sense and long-overdue change and will continue to work with the agency to further improve its programs to encourage and assist in the development of more multifamily housing.