Interest Reduction Payments_Rental and Cooperative Housing for Lower Income Families

To provide good quality rental and cooperative housing for persons of low-and moderate-income by providing interest reduction payments in order to lower their housing costs.

Agency - Department of Housing and Urban Development

The Department of Housing and Urban Development's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. HUD fulfills this mission through high ethical standards, management and accountability, and by forming partnerships with community organizations.

Office - Contact the appropriate local HUD Office listed in the Catalog Address Appendix IV.

Program Accomplishments

Reservations for additional projects are not being made under the program. No additional mortgages have been insured since 1992. Cumulative totals through September 30, 1992, were 377,680 units insured with a value of $6,480,013,120.

Uses and Use Restrictions

Use was limited to Section 236 insured and non-insured mortgages financed by State or Local Housing Finance Agencies.

Program is now inactive.

No new projects are being approved.

Projects with this subsidy are still active in the MF portfolio.

Eligibility Requirements

Applicant Eligibility

Eligible mortgagors included nonprofit, cooperative, builder-seller, investor-sponsor, and limited-distribution sponsors.

Public bodies did not qualify as mortgagors under this program.

Beneficiary Eligibility

Families and individuals, including the elderly and handicapped or those displaced by government action or natural disaster, eligible to receive the benefits of the subsidies must at the time of admission fall within certain locally determined income limits. Families with higher incomes may occupy apartments, but may not benefit from subsidy payments.


Documentation regarding the characteristics of the property and qualifications of the mortgagor was submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.

Aplication and Award Process

Preapplication Coordination

Documentation regarding property characteristics and mortgagor qualifications was assembled by the mortgagee and submitted with the application.

The sponsor held a preapplication conference with the local HUD field office with multifamily processing.

This program is excluded from coverage under OMB Circular No.


This program is excluded from coverage under E.O.


An environmental assessment was required for this program.

No applications for new projects are being accepted.

Application Procedures

No applications for new projects are being accepted. Sponsors submitted FHA Form No. 2013, application and other documentation for FHA Review of Proposed Development, to local HUD field office with multifamily processing or equivalent documentation to a State or local Housing Finance Agency approved by HUD for participation in the program. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedures

The local HUD office or State or local Housing Finance Agency reviewed the application to determine site appraisal and market analysis. Market need, correct zoning, environmental assessment and value of site fully improved were considered. The local office granted feasible proposals a tentative reservation of contract authority, and the sponsor was invited to apply for mortgage commitment, at which stage(s) further technical processing was completed. No new applications for project mortgage insurance are being accepted.


Program is inactive. No new applications are being accepted.


National Housing Act, as amended, Section 236, Public Law 90-448, 12 U.S.C. 1715.

Range of Approval/Disapproval Time





Not applicable.

Assistance Considerations

Formula and Matching Requirements

Assistance payments are made monthly by HUD to the mortgagee, and may bring the effective interest rate paid by the mortgagor down to as low as one percent. Benefits received in this way are passed on to those families qualifying for assistance in the form of reduced rents. Assisted families are required to pay for rent at least 30 percent of their adjusted income (income after certain allowable deductions), but not in excess of the fair market rent. This program has maintenance of effort (MOE) requirements; see funding agency for further details.

Length and Time Phasing of Assistance

The mortgage term normally extends for 40 years. Interest reduction payments may extend for the full term of the mortgage. For individual families, assistance ceases when their income rises to the point where they can afford the full market rent without the benefit of assistance.

Post Assistance Requirements


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 of insured projects are required to submit, electronically, an annual financial statement to HUD audited and prepared in accordance with Generally Accepted Accounting Principals and Generally Accepted Auditing Standards.

Approved mortgages, upon request by HUD, must furnish a copy of their latest financial statement.


The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgage or mortgagor in order to determine their compliance and conformance with FHA regulations and standards.


Tenant certifications for assistance payments and annual recertification must be forwarded to the HUD Field or Area Office by the sponsor. Regular financial reports are also required. Mortgagees must service and maintain records in accordance with acceptable mortgagee practices and HUD regulations.

Financial Information

Account Identification

86-0148-0-1-604; 86-4077-0-3-371.


(Outlays) FY 07 not separately identifiable; FY 08 est not separately identifiable; and FY 09 est not separately identifiable. (Note: Program is inactive.)

Range and Average of Financial Assistance

See uses and use restrictions.

Regulations, Guidelines, and Literature

Fact Sheet: Rental and Co-op Housing for Lower Income Families. No charge; 24 CFR 236 et seq.

Information Contacts

Regional or Local Office

Contact the appropriate local HUD Office listed in the Catalog Address Appendix IV.

Headquarters Office

For Management Information: Director, Office of Multifamily Housing Management, Department of Housing and Urban Development, Washington, DC 20410. Telephone: (202) 708-3730.

Criteria for Selecting Proposals

Not applicable.

Social Entrepreneurship

Rwanda as Social Entrepreneur Fund Beneficiary

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