FHA Section 232 / 223(f) Mortgage Insurance Program

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Fixed rate permanent financing for the refinance, acquisition or moderate rehabilitation of existing assisted living, nursing home, intermediate care and board and care facilities. Properties must be at least three years old. Available for properties throughout the United States.

ELIGIBLE PROPERTIES

Licensed skilled nursing and rehabilitation, assisted living, memory care, intermediate care, and board and care facilities with limited independent living units.

ELIGIBLE BORROWERS

Single-asset, special purpose entities, either for-profit or non-profit.

LOCATION

Nationwide.

LOAN AMOUNT

No minimum/no maximum (subject to General Loan Parameters).

GENERAL LOAN PARAMETERS

Maximum loan amount:

• For acquisitions, the lesser of 85% of HUD's allowable acquisition costs and 80% of appraised value.
• For refinancing, the lesser of 100% of refinancing costs and 80% of appraised value.
• For both acquisitions and refinancing, an amount that results in a minimum DSCR of 1.45x based on the underwritten NOI.

Please note, the maximum LTV and allowable acquisition costs may be increased by 5% for non-profit borrowing entities.

INTEREST RATE

Fixed-rate, subject to market conditions at time of rate lock.

TERM & AMORTIZATION

Up to 35 years or 75% of the remaining useful life of the property, fully amortizing.

LIABILITY

Non-recourse.

MORTGAGE INSURANCE PREMIUM

1% at closing,
0.65% annually thereafter.

ASSUMABILITY

Fully assumable, subject to HUD approval.

PREPAYMENT

Typically loans are prohibited from prepayment for the 1st year, then have a 9% penalty declining 1% each year thereafter until 0%.  Alternative lockout and prepayment structures are available.

PROFESSIONAL LIABILITY INSURANCE

HUD requires a minimum coverage of $1 million per occurrence and $3 million in aggregate.  Waivers may be granted in cases where premiums are high and claims history is clean.

OTHER

• Facilities financed under this program must be at least 3 years old. 
• Unlicensed independent living units are allowed, but cannot exceed 25% of the project's total units.
• Escrows are required for repairs, mortgage insurance premium, taxes, insurance, and replacement reserves.
• Required third party reports include Appraisal, PCNA, and Phase I.
• Secondary financing is allowed in the form of a surplus cash note and is subject to HUD approval.
• Cash-out refinancing is not permitted.  

Pricing:

Contact your First American representative for a price quote.