Loans to refinance Skilled Nursing, Assisted Living or Specialized Use Facilities subject to existing FHA-insured loans
- Expedited processing protocol requires no appraisal and a limited environmental review for projects involving capital improvements only.
- Requires a 1.11 X debt service coverage ratio (DSC) based on net operating income (NOI) for the trailing 12 months prior to the submission of the application.
- Maximum loan can’t exceed the original amount of the existing FHA-insured loan.
- Payback of transaction costs via debt service savings must not take longer than 10 years; HUD prefers a shorter payback period.
- The mortgage term may be extended 12 years beyond the term of the current FHA insured mortgage, with HUD’s approval, to a maximum of 40 years. However, under Lean, extensions may be considered only with appropriate mitigation measures necessary to offset the risk of the longer term.
- If a term extension is requested, a project capital needs assessment (PCNA) is required. The PCNA will look at the capital needs of the project over a single, 15 year period. The minimum reserve for replacement deposit is $1,000 per unit per year or such higher amount as is indicated by the PCNA, even with an initial deposit to the reserve for replacement escrow.
|0.30%||Application Fee to FHA (1/2 refunded after closing)|
|0.50%||Mortgage Insurance Premium|
|0.45%||Mortgage Insurance Premium – Tax Credit Transactions|
|2.00%||Maximum Financing and Placement Fees|
|2.00%||Costs of Issuance for Tax-Exempt Bond Transactions|
No inspection fee is required. An annual 0.55% Mortgage Insurance Premium (.45% for Tax Credit Transactions) is paid to FHA as part of the monthly mortgage payment.
- Full escrows required for property insurance, real estate taxes, and FHA mortgage insurance premium. These should be similar to what is currently being paid.
- Replacement reserve escrow for on-going replacement of depreciable items is required for the term of the loan. Projects must obtain a new PCNA every 10 years, with the reserve for replacement deposit adjusted based on the results of the PCNA.