Effective April 1, 2026, HUD reduced mortgage insurance premiums across every multifamily program to a flat 0.25% annually. The change applies to 221(d)(4) new construction, 223(f) refinance and acquisition, and 223(a)(7) streamlined refinance — market rate and affordable alike. There are no carve-outs, no green certification requirements, and no income restrictions attached to the reduction.
For sponsors who have been watching HUD from the sidelines, this materially changes the debt service math. And for owners already in the HUD process, it is worth confirming that your application reflects the updated MIP before rate lock.
What changed, by program.
| Program | Category | Prior MIP | New MIP |
|---|---|---|---|
| 221(d)(4) | Market Rate | 55 bps | 25 bps -30 bps |
| 221(d)(4) | Affordable | 45 bps | 25 bps -20 bps |
| 223(f) | Market Rate | 60 bps | 25 bps -35 bps |
| 223(f) | Affordable | 45 bps | 25 bps -20 bps |
| 223(a)(7) | All | 55 bps | 25 bps -30 bps |
The 223(f) market rate reduction is the most significant in absolute terms — a 35-basis-point cut. On a $20 million loan, that is $70,000 per year in reduced MIP expense, or roughly $2.45 million over the 35-year term. For deals where DSCR was the binding constraint at the old MIP rate, this reduction may meaningfully improve loan proceeds.
HUD is no longer a cost-disadvantaged option. At 0.25% MIP across all programs, the conversation has shifted entirely to timeline and execution.
Why this matters for Mountain West sponsors.
The historical objection to HUD was never rate — HUD has consistently offered the lowest all-in cost of permanent capital for stabilized multifamily over a full hold period. The objection was timeline and process complexity. That calculus has not changed with the MIP reduction, but the cost advantage has widened further.
Conventional agency execution at Fannie or Freddie carries no MIP, but it comes with a 10-year balloon, covenant requirements, and refinance risk at maturity. At 0.25% MIP, a 35-year HUD non-recourse loan is nearly cost-equivalent on an annual basis to the agency alternative — and eliminates all of the structural risk that comes with balloon debt. For sponsors with a long hold strategy, the comparison has rarely been more favorable to HUD.
What it means for 221(d)(4) deals
Ground-up construction deals benefit in two ways. First, MIP during the construction period is reduced alongside the permanent phase. Second, the improved debt service coverage at stabilization expands the universe of projects that pencil as HUD candidates. Developers evaluating construction financing for Mountain West multifamily should run HUD sizing alongside their conventional construction quotes before committing to a lender.
What it means for 223(f) refinance
For owners approaching stabilization on lease-up assets — or sitting on floating-rate bridge debt from the 2020-2022 era — the 223(f) case has strengthened. The loan maturity wave running through 2026 to 2030 is pressing sponsors toward permanent placement decisions. At 0.25% MIP, 35-year fixed, non-recourse, HUD 223(f) remains the most durable option for owners who do not plan to sell in the next 10 years.
What it means for 223(a)(7) streamlined refinance
Owners already in HUD-insured loans have the most straightforward path to capturing the MIP reduction. The 223(a)(7) program allows existing HUD borrowers to refinance into current market rates and updated terms without a new appraisal or market study. For properties that underwrote at the prior MIP schedule, this is a meaningful improvement to annual debt service with limited process overhead.
The rate environment context.
The MIP reduction arrives while the 10-Year Treasury is ranging between 4.0% and 4.5%, with the Fed holding rates steady through Q1 2026 and projecting one to two cuts in the second half of the year. Tariff-driven inflation uncertainty has compressed the pace of rate relief, but the structural case for locking long-term fixed debt is strong. Whatever rate you lock today is the highest you will pay for the full 35 or 40 years. If rates decline, HUD's rate modification program allows borrowers to reset at a lower rate at minimal cost — without a full refinance.
The combination of 0.25% MIP, non-recourse terms, and a rate modification mechanism that protects against paying above-market debt service long-term makes the current HUD window one of the more favorable entry points we have seen in this cycle.
Next steps.
If you have a stabilized asset, a lease-up approaching 90% occupancy, or a ground-up project in the pipeline, we are running preliminary HUD sizing at no cost. The screen takes one conversation and comes back with a loan amount, rate range, and an honest read on whether HUD is the right execution for your deal at current terms.
Reach out directly at cwagner@wasatchcg.com or 801.455.6965. We will come back with numbers.
For informational purposes only. Not investment advice. MIP schedule effective April 1, 2026 per HUD Office of Housing. Sources: HUD Office of Housing; Federal Reserve (April 2026).