Industry Celebrates as FHA Raises Threshold

The Federal Housing Administration (FHA) raised the threshold for at which a multifamily loan is considered a large loan from $75 million to $120 million, the first major increase to the threshold in almost a decade. This increase will enable more transactions (both affordable and market rate) to utilize standard underwriting processes when submitted for FHA multifamily insurance instead of the more complex requirements applicable to so-called "large loans." 

When considering whether to revise the threshold, the US Department of Housing and Urban Development performed risk analysis and solicited industry feedback, which indicated that an upward revision would be wise in light of increases in housing and construction costs over the last several years, without providing undue risk to the FHA insurance fund. 

The majority of the multifamily housing industry has reacted positively to the news, and there are hopes that the increase will help ease credit in the multifamily sector, particularly for larger loans.