FHA 221(d)(4)‎ > ‎

Cash Requirements for 221D4

FHA 221(d)4 Loan Program

Requirements During Construction:

Working capital deposit, equal to 2% of the mortgage, is escrowed at closing, subject to release one year after substantial completion.

An operating deficit escrow will likely be required and can be posted in cash or letter of credit.

Any "off site" construction costs or demolition costs require separate funding by the borrower.

An "Initial Endorsement" will commence the construction phase.

The general contractor must pay Davis Bacon minimum wage rates as required by HUD.

The mortgagor must retain a qualified supervisory architect during construction.

A cost certification by the general contractor and owner will be required after construction completion.

The general contractor must execute a guaranteed maximum price contract, provide a 100% performance and payment bond (or cash escrow or letter of credit acceptable to FHA), and have liquid net worth equal to at least 5% of the project construction contract plus all other uncompleted construction work.

FHA 221(d)4 Loan Program
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