HUD Opens Express Lane for LIHTC Projects: 221(d)(4) New Construction Underwriting Targeted Within 30 Days
The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), has issued Mortgagee Letter 2026-13 implementing the Low-Income Housing Tax Credit (LIHTC) Express Lane for Multifamily Section 221(d)(4) new construction loans that use LIHTC equity. HUD said in its official announcement that underwriting for eligible transactions can be completed in 30 days or fewer.
The main changes eliminate the previous eligible project size limit of 200 units or less, permit new construction of 4% LIHTC transactions with tax-exempt bonds, restore the standard 80% loan-to-cost limit, eliminate the required 25% deferred developer fee, and reemphasize the 30-day firm commitment decision timeline. Both 4% LIHTC transactions with tax-exempt bonds and 9% LIHTC transactions are eligible.
To qualify, projects must have LIHTC-restricted rents but cannot include HUD Multifamily Section 8 project-based rental assistance, because the time involved in determining Section 8 rents is not congruent with an expedited review. The letter sets experience requirements for the development team, general contractor, architect and management agent, and projects with environmental risk factors requiring extensive HUD analysis are not eligible.
Industry participants note the initiative is modeled on the Section 232 express lane for senior housing healthcare facilities released in July 2025, and is intended to reduce paperwork for highly experienced, lower-risk LIHTC developers and speed financing so more affordable housing gets built.
(Source: U.S. Department of Housing and Urban Development)
Source: U.S. Department of Housing and Urban Development
Published by GSM · USA (original Chinese edition)
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