HUD Announces Fee for Borrowers of the Section 108 Program

On November 19, 2025, HUD announced in the Federal Register a rule that may require borrowers of the Section 108 Loan Guarantee Program to pay a fee to HUD to offset the credit subsidy costs of the guaranteed loans.

According to HUD, if authorized by statute, this notice sets a fee for Section 108 loan disbursements for fiscal year 2026 at 0.58 percent of the principal amount of the loan.

The calculation of the fee uses similar calculation models used in the past for the program, however it also incorporates updated information regarding the composition of the Section 108 portfolio and the timing of the estimated future cash flows for defaults and recoveries.

For fiscal year 2026, the fee will only be applied at the time of loan disbursements. The notice states that future notifications may provide for a combination of upfront and periodic fees for loan guarantee commitments awarded in future fiscal years. If so, HUD will provide the public with an opportunity to comment if
appropriate by law.