FHA SECTION 232/223(f)

HUDFinancing for the Purchase or Refinancing of Existing Nursing Homes, Assisted Living Facilities and Specialized Use Projects.

PROGRAM FEATURES

  • Statutory underwriting limits include Maximum loan to value is 90% (85% for for-profits); minimum 1.11x (1.17x for for-profits) debt service coverage based on a maximum of 95% occupancy; maximum term is 35 years with full amortization.
  • Under LEAN processing, HUD has indicated that loans underwritten with the following loan to values will be considered “high risk” and will require “justification/mitigation”:
    • Skilled nursing facilities, 80% (85% for Not for profit Owner/Operators)
    • Assisted Living facilities, 80% (85% for Not for profit Owner/Operators)
  • Under LEAN processing, HUD has indicated that loans underwritten with debt service coverage below 1.45x will be considered “high risk” and will require “justification/mitigation”.
  • Loan is pre-payable, assumable and non-recourse.
  • Repairs may not cost in excess of 15% of the project’s value after repairs are completed or involve replacement of 2 or more major building components.
  • Cost of repairs and initial deposit to a reserve fund for building/equipment replacement can be included in the loan.
  • Projects must be at least three years old prior to filing an application and must not have been substantially rehabilitated within that period.
  • Facilities must comply with the State’s eligibility requirements concerning licensure and operating requirements.

FEES

0.3% Application Fee to FHA
1.0% Mortgage Insurance Premium (up-front at closing)
1.0% Inspection Fee (on repair amount)
2.0% Maximum Financing Fee
1.5% Maximum Placement Fee
2.0% Costs of Issuance for Tax-Exempt Bond Transactions

An annual 0.5% Mortgage Insurance Premium (.45% for low income housing tax-credit deals) payable to FHA is required. Additional fees are required for third party market studies, environmental reports, appraisals, and building inspection and engineering reports. The cost of these reports may be included in the financing.

ESCROWS

  • Full escrows required for property insurance, real estate taxes, and FHA mortgage insurance premium.
  • Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan.