HUD Loans


The Section 231 insures mortgage loans to facilitate the construction and substantial rehabilitation of multifamily rental housing for elderly persons (62 or older) and/or persons with disabilities.


Section 231 insures lenders against loss on mortgages. Section 231 was designed to increase the supply of rental housing specifically for the use and occupancy of elderly persons, and/or persons with disabilities. However, few projects have been insured under Section 231 in recent years; developers have opted to use Section 221(d)(4).

Type of Assistance

FHA mortgage insurance for HUD-approved lenders.

Eligible Activities

Insured mortgages may be used to finance the construction and substantial rehabilitation of detached, semidetached, walk-up, or elevator type rental housing designed specifically for elderly or handicapped individuals consisting of eight or more dwelling units. For nonprofit sponsors, the maximum loan amount is 100 percent of the estimated replacement cost of the building (or 100 percent of project value for rehabilitation projects). For all other sponsors, the maximum loan is 90 percent of the replacement cost (or 90 percent of project value for rehabilitation projects). Contractors for new construction or substantial rehabilitation projects are required to comply with prevailing wage standards under the Davis-Bacon Act.

Eligible Borrowers

Mortgagors include private profit-motivated developers, and non-profit sponsors.

Eligible Customers

All elderly or persons with disabilities are eligible to occupy apartments in a project whose mortgage is insured under the program.


The sponsor has a preapplication conference with the local HUD Multifamily Hub or Program Center to determine the feasibility of the project. The sponsor must then submit a site appraisal and market analysis (SAMA) application (new construction projects), or a feasibility application (substantial rehabilitation projects). Following HUD’s issuance of a SAMA or feasibility letter, the sponsor submits a firm commitment application through a HUD-approved lender for processing. Considerations include market need, zoning, architectural merits, capabilities of the borrower, and availability of community resources. If the project meets program requirements, the local Multifamily Hub or Program Center issues a commitment to the lender for mortgage insurance.

Technical Guidance

This program is authorized by Section 231 of the National Housing Act, as amended, Public Law 86-372 (73 U.S.C. 654 and 12 U.S.C. 1715 (V))). Program regulations are found in 24 CFR 231.The program is administered by the Office of Multifamily Housing Programs, Office of Production, Program Administration Division.