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Content provided by the Catalog of Federal Domestic Assistance
14.184 Mortgages Insurance for Single Room Occupancy (SRO) Projects




National Housing Act, Section 221(d), 12 U.S.C. 1751(d); Section 223(g), 12 U.S.C. 1715 (g).
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The Single Room Occupancy (SRO) Program provides mortgage insurance for multifamily properties consisting of single-room units. There are no Federal rent subsidies involved with this SRO Program. It is aimed at those tenants who have a source of income but are priced out of the rental apartment market. SRO projects will generally require assistance from local governing bodies or charitable organizations in order to reduce the rents to affordable levels.


Guaranteed/Insured Loans.
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HUD, through the Federal Housing Administration (FHA) insures lenders against loss on mortgages used to finance construction or substantial rehabilitation projects consisting of five or more units comprised primarily of one room residential units, with no more than 10 percent of the total gross floor space dedicated to commercial use (20 percent for substantial rehabilitation projects). Contractors for new construction and substantial rehabilitation projects must comply with prevailing wage requirements under the Davis- Bacon Act.


Applicant Eligibility:   Eligible applicants may be nonprofit entities; builder/sellers teamed with a nonprofit purchaser, a limited distribution entity, profit-motivated entities or public entities. Cooperative lenders or inventors are not eligible.

Beneficiary Eligibility:   Residents are subject to normal tenant selection procedures. There are no income limits for admission.

Credentials/Documentation:   Along with the Application for Mortgage Insurance, the applicant must provide a market profile demonstrating a clear need for the proposed SRO, experience profiles as to SRO operation, a certification from the local government assuring support of the project, and a relocation plan if needed.

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Pre-application Coordination:   The sponsor has an initial conference with the local HUD Multifamily Hub and Program Center to determine the preliminary feasibility of the project before a Site Appraisal and Market Analysis (SAMA) Application (for new construction projects or feasibility application (for substantial rehabilitation projects) is submitted. This program is excluded from coverage under OMB Circular No. A-102. An environmental assessment is required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

Application Procedure:   The sponsor submits an application for a SAMA or feasibility application. Following HUD's issuance of a SAMA or feasibility letter, the sponsor submits a firm commitment application through a HUD-approved mortgagee to the local HUD Multifamily Hub and Program Center for processing. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:   The project is reviewed to determine its feasibility. If the project meets program requirements, the HUD Multifamily Hub or Program Center issues a commitment to insure the mortgage.

Deadlines:   Deadlines are established on a case-by-case basis by the local HUD Multifamily Hub or Program Center.

Range of Approval/Disapproval Time:   Processing time, depends upon the degree of preparation by the sponsor, and the workload of the HUD Multifamily Hub or Program Center.

Appeals:   If an application for mortgage insurance is denied, HUD will state the reasons for the denial. If reapplication is desired, the applicant may reapply subject to concurrence of the lender.

Renewals:   The term of a commitment to insure may be extended when more time is required to close the loan.


Formula and Matching Requirements:   The maximum amount of a Section 221 (d)(4) profit motivated loan may not exceed 90 percent of the estimated replacement cost. The maximum amount of a Section 221(d)(3) non-profit loan is 100 percent of the estimated replacement cost. The mortgage insurance premium is one-half percent of the mortgage amount. The HUD fees for application processing and commitment are $3 per $1,000 of the mortgage amount. The HUD-inspection fee may not exceed $5 per $1,000 of the mortgage amount.

Length and Time Phasing of Assistance:   The maximum mortgage term is 40 years, or not in excess of three-fourths of the remaining economic life, whichever is less.


Reports:   Any change of the mortgagor during the period of mortgage insurance must be approved by HUD. Defaults in meeting the mortgage terms must be reported. All mortgagors are required to submit an annual financial statement to HUD. All approved mortgagees at any time upon request by HUD must furnish copies of their latest financial statements.

Audits:   The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgagee or mortgagor to determine their compliance and conformance with HUD regulations and standards.

Records:   Mortgagees are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and HUD regulations.


Account Identification:   86-4077-0-3-371.

Obligations:   (Mortgages insured) Reported under program 14.133.

Range and Average of Financial Assistance:  
No Data Available.

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The department did not insure any loans under this program for FY2001 and does not anticipate any loans to be insured for FY2002.


24 CFR 221.565; HUD Handbook 4560.3.


Regional or Local Office:   See Regional Agency Offices. Persons are encouraged to communicate with the nearest local HUD Multifamily Hub and Program Center listed in or the nearestHUD Office listed in the Catalog Address Appendix IV.

Headquarters Office:   Carmelita James 451 Seventh Street SW, Washington, District of Columbia 20410 Email: Phone: (202) 402-2579

Web Site Address:


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