8.9.1 Sections 220, 221(d)(4), 241(a) and 231 Projects

A. Term: The term of the mortgage is the lesser of 75% of the estimated remaining economic life of the physical improvements or 40 years from the date of the first payment to principal. Express the mortgage term in whole or partial years, with a partial year expressed on months, for example 26 years, 3 months.

• B. Amortization starts on the following date:

1. For Insurance of Advances projects amortization begins 4 months (after the scheduled construction completion date as estimated in the Firm Commitment. (For example: with a 16-month construction period, amortization begins in the 21[st] month).

2. For Insurance Upon Completion project, the first day of the second month following the date of Final Endorsement.

• C. Section 241(a) projects:

1. Term . The Section 241(a) loan should generally be coterminous with the underlying FHA-insured first mortgage, if that loan has more than 25 years remaining on its term.

2. Amortization . If fewer than 25 years remain on the term of the first mortgage and so long as the term of the insured mortgage is no greater than 75% of the project’s remaining useful life, HUD will consider an amortization period up to 40 years regardless of the underlying first mortgage’s amortization period.