How RAD conversions are paid for
52% of closed RAD conversions used no tax credits. Among the 582 of those that report a cost, the median hard cost was $2,748 a unit, which points to light repairs. Deals with 4% credits and bonds ran a median of $135,723 a unit, and 9% deals $177,055. Tax credits went from 40% of closings through 2017 to 61% in the last four years.
| Financing | Closed deals | RAD units | Median hard cost per unit |
|---|---|---|---|
| No tax credits | 1,019 | 103,590 | $2,748 |
| 4% tax credits (with tax-exempt bonds) | 630 | 77,202 | $135,723 |
| 9% tax credits | 300 | 20,769 | $177,055 |
| Both 4% and 9% | 6 | 1,499 | $161,814 |
| FHA-insured debt | 237 | 38,767 | $75,345 |
| RAD/Section 18 blend | 267 | 31,349 | $155,167 |
| New construction | 367 | 19,212 | $241,947 |
| All closed conversions | 1,955 | 203,060 | $78,428 |
Categories overlap: an FHA-insured deal can also use tax credits. Hard cost per unit divides reported hard construction costs by RAD plus non-RAD units, on deals that report a cost.
By closing year
| Year | Closed | Tax credits | FHA-insured | Section 18 blend |
|---|---|---|---|---|
| 2013 | 13 | 8 | 2 | 0 |
| 2014 | 115 | 38 | 11 | 0 |
| 2015 | 130 | 83 | 24 | 0 |
| 2016 | 263 | 101 | 24 | 0 |
| 2017 | 304 | 102 | 32 | 0 |
| 2018 | 182 | 85 | 24 | 2 |
| 2019 | 163 | 81 | 17 | 15 |
| 2020 | 173 | 87 | 25 | 33 |
| 2021 | 122 | 59 | 21 | 19 |
| 2022 | 134 | 76 | 20 | 27 |
| 2023 | 77 | 55 | 10 | 30 |
| 2024 | 90 | 51 | 11 | 37 |
| 2025 | 112 | 71 | 7 | 61 |
| 2026 | 77 | 39 | 9 | 43 |
Five common structures
Rent stream only. The conversion swaps public housing subsidy for a Section 8 contract and does modest repairs from reserves, capital funds or a small loan. That is most of the early deals and most of the no-credit row above.
4% credits with tax-exempt bonds. The workhorse for rehab. Bond-financed deals get 4% credits without competing for a 9% allocation, as long as private activity bond volume cap is available in the state. The RAD notice (section 1.4.B.5) observes that many states face excessive demand for 9% credits and routinely don't use their full supply of 4% credits with bonds.
9% credits. More equity per dollar of cost, used for new construction and deep rehab, but awarded competitively by the state allocating agency.
FHA-insured debt. The RAD notice names Section 223(f) for permanent financing with repairs and Section 221(d)(4) when the work counts as substantial rehabilitation. Since October 1, 2025 both carry a 0.25% annual mortgage insurance premium (90 FR 45789). Under Mortgagee Letter 2025-03, properties with 90% or more rental assistance can size to 90% of value or cost at a 1.11 debt service coverage ratio. FHA insurance can also credit-enhance tax-exempt bonds.
RAD/Section 18 blends add tenant protection vouchers to part of a property, which raises the blended rent and the debt it can carry. Supplemental 4C set the rules for blending them into one RAD contract; HUD's 2026 rents tool estimates the blended rent for every unconverted project. Run the rent check to see what each rent supports.
Sources
RAD Resource Desk Component 1 property export (October 24, 2026); HUD RAD Notice Revision 4 as amended, sections 1.4.B.4 and 1.4.B.5; 90 FR 45789 (September 23, 2025); HUD Mortgagee Letter 2025-03 (January 8, 2025).
Putting the debt together?
Send the conversion to the commercial mortgage desk at Janover Capital: FHA, bank, bond or tax-credit execution.