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Oregon Housing and Community Services

Permanent Loan Program

Senate Bill 684 of the 2025 Oregon Legislative Session directed OHCS to develop and implement direct lending strategies by January 1, 2027. This will be the first time in over two decades that the agency is offering this resource. The Permanent Loan Program is anticipated to launch summer of 2026.

About the Program

Permanent loans are a way for Oregon Housing and Community Services to offer fixed-rate, first-lien permanent financing. The agency does this through bond sales in which the proceeds are then used construct, acquire, rehabilitate, or refinance multifamily rental housing. This program can be used with other funding programs such as:

  • 9% Low-Income Housing Tax Credit (LIHTC)
  • 4% LIHTC
  • Local Innovation Fast Track
  • Older Adult Housing Program
  • Mixed-income housing programs

There are two loan options with similar qualifications and loan criteria.

  • Elderly and Disabled (E&D): Oregon state bond program for older adults (100% of units for age 62+ or 80% of units for 55+) and/or people with disabilities (20% of units).
  • U.S. Housing and Urban Development (HUD) Risk-Share: Loans are credit enhanced by Housing Finance Agency Risk-Sharing Program (Section 542(c))

Program Loan Terms

Loan limits

  • Minimum size: $3,000,000. Smaller loans will be considered on a case-by-case basis and will require alignment with OHCS scheduled timelines.
  • Debt Service Coverage Ratio (DSCR): Minimum of 1.15x DSCR.
  • Maximum Loan to Value (LTV): Lesser of 90% of the project’s improved restricted appraised value or 95% of total project development costs.

Loan terms

  • Amortization: Up to 40-year amortization.
  • Term: Fully amortizing and 17-year balloon available.
  • Affordability length: 15 years or the life of the loan, whichever is longer.
  • Recourse: Non-recourse, with standard industry carveouts and environmental indemnity.
  • Payments: Monthly amortizing principal and interest payments with outstanding principal due at loan maturity. In addition, escrow for taxes and insurance and required reserve accounts.
  • Prepayment: OHCS will consider prepayment requests after year 10 if the project is refinancing with an OHCS loan. Otherwise, OHCS will consider prepayment requests after year 15 with a five-year extension of affordability.
    • All prepayments require a prior written 90-day notice to OHCS.
    • Applicants are required to pay all associated costs, including yield maintenance cost, processing cost, and any other costs associated with the transaction.

Interest Rates and Charges

  • Competitive fixed rates: Tax-exempt and taxable. The interest rate sheet will have more information (coming soon).
    • Tax-exempt options: Private activity bonds, 501c3 bonds, and recycled bonds
    • Risk-share rates include a 0.125% FHA (Federal Housing Administration) Mortgage Insurance Premium
  • Rate lock: Rate may be locked up to 30 days prior to financial close, subject to all approvals in and requirements met. Rate may be locked for the term of the construction period, not to exceed 36 months, unless OHCS grants extensions.
  • Conversion extensions: Up to three, three-month extension(s) permitted upon payment of a fee equal to 0.25% of the permanent loan amount plus possible additional financial costs related to the extension.
  • Application charge: $1,500, invoiced after submission of a complete Oregon Centralized Application (ORCA) Impact Assessment and required prior to OHCS review.
  • Good faith deposit: $10,000 nonrefundable, due at the start of loan working group calls and credited toward the OHCS issuance charge at financial close.
  • Issuance charge: 1.5% of the full loan amount charged at financial close.
  • Transaction costs: Actual cost of issuing bonds and loaning funds to projects, including bond counsel, state treasury, rating agency, financial advisors, business credit reports, appraisal, market study and three on-site construction inspections.
    • Projects will most likely be pooled with other projects in a single bond sale and bond issuance costs will be shared with the pooled projects.
  • Annual monitoring charge: $45 per unit per year. If a project is funded by more than one OHCS source, the largest eligible monitoring charge applies.

Occupancy requirements

  • Minimum of 20% of units at 50% of AMI (Area Median Income) or 40% of units at 60% AMI
    • For 501c3 bonds based on charitable status, an additional requirement of 75% of all units at 80% AMI or lower.
  • Remaining units maybe be any level AMI, including unrestricted.
  • OHCS-regulated units must represent a comparable share of the available unit sizes, by bedroom count.

Due diligence

  • Appraisal report with market study section with scope and vendor satisfactory to and ordered by OHCS.
  • Construction cost estimate aligned with uniform standards, supported by a contractor-prepared report. Construction lender’s cost review is acceptable with appropriate reliance, at OHCS’ discretion.
  • Phase I and Phase II (if applicable) Environmental Site Assessment, obtained within one year prior to acquisition, with required updates.
    • Where federal funds or federal mortgage insurance is involved (including risk share) the Phase I shall reference compliance with HUD policy under 24 CFR §58.5(i)(2) or §50.3(i).
  • Capital Needs Assessment (CNA) for acquisition, rehabilitation and refinance projects, with a Replacement Reserve Needs Analysis (RRNA) covering the next 20-year term. A longer RRNA period may be required if the Perm Loan term exceeds 20 years.
    • A building envelope inspection must be included in the CNA or as a separate report.
  • HUD-2530 previous participation clearance (risk share only).
  • Sponsor creditworthiness items: Real Estate Owned (REO) schedule, three years of organizational financial statements, and schedule of contingent liabilities.

Conversion requirements

  • 93% stabilized rental occupancy for 90 consecutive days, evidenced by certified rent rolls signed by the management agent and borrower.
  • Deposit Account Control Agreement among OHCS, the borrower, and the lending institution holding the reserve account(s) is in form and substance acceptable to all parties and ready to execute.
  • If applicable, successful completion of the OHCS final application and confirmed receipt of a recorded Declaration of Land Use Restrictive Covenants.
  • Project income is sufficient to pay operating expenses, required debt service, reserves and monitoring fees.
  • All closing requirements outlined in the OHCS Final Commitment Letter and document checklist, as applicable.

Required impounds and reserves

  • Replacement reserve: Annual deposits per the tiered schedule in the General Policy and Guidelines Manual ($450 per unit; $500 per unit plus $1,500 per unit initial capitalized contribution for PSH). Initial cash deposit required for existing properties.
  • Operating reserve: Minimum of six months of operating expenses, debt service, and replacement reserve contributions.
  • Lease-up reserve: Submit cash flow analysis utilized to determine the amount.&
  • Impounds held by OHCS: One year’s prepaid hazard and liability insurance premiums, and property tax assessments collected at loan closing and in advance for each subsequent year.
  • Other reserves: As required by OHCS in its discretion, by partner lenders or investors, or by program rules of layered public sources.

These loan terms are provided for informational purposes only, does not constitute a commitment from OHCS, and is subject to change at any time.

Visit our Printing Help webpage for instructions on printing or saving these loan terms as a PDF.

Additional terms and requirements will be in the Permanent Loan Program manual and ORCA manual after program launch.

OHCS wants to ensure that everyone has access to its information and programs. If you would like this information in a different language or alternate format, please email Language.Access@hcs.oregon.gov.