HUD Streamlines FHA Loans for LIHTC Projects
The Department of Housing and Urban Development eases financing rules for eligible low-income housing tax credit multifamily developments.
Updated on Nov. 4, 2026 in Construction
HUD released a mortgagee letter on Monday streamlining FHA-insured construction loan financing for eligible LIHTC multifamily projects. The updates reduce paperwork and expand project eligibility under Multifamily Section 221(d)(4) New Construction Loans.
Why it matters
The LIHTC express lane aims to make FHA financing more efficient by reducing processing times for experienced developers. It follows a similar express lane HUD released in July 2025 for senior housing healthcare facilities.
The express lane removes the 200-unit size cap and the required 25% deferred developer fee, and restores the standard 80% loan-to-cost limit. HUD targets a 30-day underwriting and closing timeline, against 54 business days from submission to closing on two Section 232 deals.
The players
U.S. Department of Housing and Urban Development (HUD)
The federal agency that administers FHA mortgage insurance and the Multifamily housing programs affected by the mortgagee letter.
The details
Eligible projects must have LIHTC-restricted rents and cannot include HUD Multifamily Section 8 project-based rental assistance, and projects with environmental risks requiring extensive HUD analysis are excluded. Development teams, general contractors, architects and management agents must meet experience requirements, while HUD's loan sizing and underwriting standards remain unchanged.
Timeline
July 2025: HUD released the Section 232 Express Lane for senior housing healthcare facilities, which the LIHTC express lane is modeled on.
November 3, 2026: HUD released the mortgagee letter streamlining the LIHTC construction loan process.
Market Landscape
The LIHTC express lane extends the streamlined approach HUD introduced in its July 2025 Section 232 Express Lane for senior housing healthcare facilities to affordable multifamily developments. It signals a continued federal effort to speed FHA-insured construction financing for experienced developers building low-income housing.
Developers of eligible LIHTC multifamily projects may face fewer documentation requirements and a faster path to closing under the express lane. Projects that do not meet the rent restriction, subsidy exclusion, or environmental criteria remain subject to the standard FHA process.
The takeaway
Developers pursuing LIHTC financing should check the eligibility criteria and experience requirements before applying for the express lane, since the 30-day timeline depends on a complete submission.
Further reading
Explore more on Construction in the United States, where federal housing financing rules shape project timelines.
Source note: This article includes information reported by Construction Dive.
