Loans to acquire or refinance skilled nursing, assisted living and specialized use facilities.
PROGRAM FEATURES
- All project types generally are underwritten at an 80% loan-to-value ratio (LTV) and a 1.45 X debt service coverage (DSC).
- Loan is pre-payable, assumable and non-recourse; maximum term is 35 years with full amortization.
- Cost of repairs, improvements and an initial deposit to a reserve for replacement fund based on a fifteen year projection are financeable; however, the cost of repairs and improvements may not exceed 15% of the project’s value after repairs are completed or involve replacement of two or more major building components. Projects whose costs exceed these levels may qualify under Section 232 as “substantial rehabilitation” transactions.
- Projects must be at least three years old prior to filing an application and must not have been substantially rehabilitated within that period.
- Project debt incurred within two years of the filing of an application must be analyzed to determine program eligibility; project debt that is more than two years old does not require additional analysis.
- Prior loans whose proceeds included equity take-outs could be immediately eligible for refinancing, depending upon the amount of the loan used for equity and the HUD-insured loan-to-value.
- If less than 50% of the prior loan was used for equity, and the HUD-insured loan does not exceed 70% of value, then no seasoning is necessary.
- If 50% or more of the prior loan was used for equity, and the HUD-insured loan does not exceed 60% of value, then no seasoning is necessary.
- If 50% or more of the prior loan was used for equity and the HUD-insured loan is 61% or more of value, then two years of seasoning is necessary.
- The seasoning period for prior loans – regardless of the use of proceeds – will remain two years if the HUD-insured loan is at least 71% or more of value.
- Debt associated with related-party purchases can be refinanced with a HUD-insured loan immediately instead of after a two-year seasoning period provided three conditions related to the sale are met:
- The seller has no residual rights to control the project;
- The seller has no residual rights to reacquire the project until not less than five years after the HUD-insured loan closing; and,
- The purchase must have occurred prior to the date the application for HUD mortgage insurance was filed.
- Facilities must comply with the State’s eligibility requirements concerning licensure.
FEES
| 0.30% | Application Fee to FHA |
| 1.00% | Mortgage Insurance Premium Up Front at Closing |
| $30 per unit | Inspection Fee |
| 2.00% | Maximum Financing (Origination) Fee |
| 1.50% | Maximum Placement Fee |
| 2.00% | Costs of Issuance for Tax-Exempt Bond Transactions |
An annual 0.65% Mortgage Insurance Premium (.45% for Tax Credit Transactions) is paid to FHA as part of the monthly mortgage payment.
ESCROWS
- 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. The amount of the annual deposit will be revised after 10 years based on a capital needs assessment.
- An escrow equal to 120% of the cost of repairs is required. Approximately 100% is funded from loan proceeds; the Borrower funds the remaining 20%, which is released upon completion of repairs.
- A debt service reserve may be required if the Project has not reached its targeted underwriting occupancy at time of loan approval.