What happens to a HUD loan when you sell the property, pay it off early or refinance.
Can a buyer take over a HUD loan?
Yes. Bravo Capital's HUD loans are fully assumable, subject to required approvals. A buyer can take over the existing loan, with its fixed rate and remaining term, instead of the seller paying it off. The assumption requires review and approval; it is not automatic.
An owner can also pay a HUD loan off early. Bravo's published HUD terms list prepayment as 10% in year one, then declining 1% per year, with customizable options potentially available. Owners who want a lower rate on an existing HUD loan can use a HUD 223(a)(7) streamlined refinance.
Yes
Fully assumable, subject to required approvals
10%
Prepayment in year one, then declining 1% per year
223(a)(7)
Streamlined refinance for a property that already has a HUD loan
Three ways to exit a HUD loan
01
Sell with the loan
The buyer assumes the HUD loan, keeping its fixed rate and term. HUD and the lender review and approve the buyer first.
02
Refinance with HUD 223(a)(7)
For a property that already has an FHA-insured mortgage. Built around the existing HUD debt and eligible refinance costs, not new cash out.
03
Pay it off
Sell free and clear or refinance elsewhere. The prepayment schedule applies: 10% in year one, then declining 1% per year.
Prepayment and assumption at a glance
- HUD 223(f)
- Fully assumable. Prepayment 10% in year one, then declining 1% per year
- HUD 221(d)(4)
- Fully assumable. Prepayment 10% in year one, then declining 1% per year
- HUD 223(a)(7)
- Fully assumable. Prepayment 10% in year one, then declining 1% per year
- HUD 232 healthcare
- Fully assumable. Prepayment 10% in year one, then declining 1% per year
- Custom schedules
- Customizable prepayment options may be available
- Approval
- Every assumption is reviewed and approved; it is not automatic
Selling or refinancing: common questions
- Is a HUD 223(f) loan assumable?
- Yes. Bravo's FHA 223(f) loans are fully assumable, subject to required approvals. That is valuable if a sponsor later sells and the buyer wants to assume the existing HUD-insured debt.
- What is the prepayment penalty on a HUD loan?
- Bravo's published terms for HUD 223(f), 221(d)(4) and 223(a)(7) list prepayment as 10% in year one, then declining 1% per year; customizable options may be available.
- Can I refinance a HUD loan into another HUD loan?
- Yes. HUD 223(a)(7) is for a property that already has an FHA-insured mortgage. It is generally built around the existing HUD-insured debt and eligible refinance costs rather than new acquisition or cash-out proceeds.
Planning a sale or refinance?
Tell us about the property and its HUD loan. We'll walk you through the options.
