FHA 232 Assisted Living & Nursing Home Acquisition and Refinance
FHA 232 Loan Program is used for new construction of Skilled Care, Assisted Living, Nursing, Memory Care and Bed & Board facilites. FHA 232 is the only 40-year fixed rate, fully amortizing, 90% LTV, non-recourse health care facility finance program in existence.
Maximum Loan Term
40 years – not to exceed 75% of remaining economic life after the construction period
Independent Living
No more than 25% of the units can be for Independent Livng
Personal Liability
Non-recourse for monetary default, “bad boy” carve-outs excepted
Eligible Borrowers
For-profit individuals and entities and not-for-profit single asset entities
Prepayment
Typically closed for 3 years then pre-payable year 4 at 107% of par declining 1% per year. Shorter lock-outs are obtainable at a higher note interest rate
Maximum Loan Refinancing
New Construction – The lesser amount of:
- 90% of stabilized value (95% for Not-For-Profits).
- 90% of mortgageable replacement cost (95% for Not-For-Profits)
- Amount debt serviced by 90% of the estimated NOI attributable to realty (95% for Not-For-Profits)
- 100% of mortgageable costs less grants, public loans and tax credits
- FHA Statutory mortgage limits (FHA statutory loan limits are subject to adjustment based on the location of the project.
- 90% of stabilized value (95% for Not-For-Profits)
- Amount debt serviced by 90% of estimated NOI attributable to realty (95% for Not-For-Profits)
- If owned – 100% of hard and soft costs plus the lesser of (a) existing debt or (b) 90% of existing value
- 100% of mortgageable costs less grants, public loans, and tax credits
Interest Rate
Market interest rates change daily. Call for quote.
FHA Application Fee and Inspection Fee
0.3% of the loan amount due at application and .5% of construction loan amount due at closing
Origination Fee
Negotiable
3rd Party Costs
$15,000 to $30,000 depending on size and complexity
MIP
.57% of declining loan amount per annum ( .85% for LIHTC transactions)
Repairs/Replacements
Repairs, deferred maintenance or capital improvements up to of 15% of value or $6,500 per unit plus one major system (adjusted for area) can be included in loan.
Risk-based Maximum Loan Amounts:
FHA has established risk thresholds that cannot be exceeded except in exceptional cases -
- 75% loan-to-value for new construction assisted living
- 80% loan-to-value for new construction nursing homes
- 1.45 debt service coverage ratio for all projects
- Strong not-for-profits are eligible for a 5% LTV increase
- Maximum loan-to-cost remains 90% (95% for Not-For-Profits)
Additional Features
- Certificates of Occupancy dated three years prior to date of application for existing properties (subject to waiver)
- Pre-review is required by HUD
- Davis Bacon prevailing wage requirement apply
- A replacement reserve will be funded at closing
- Escrows for property taxes, insurance, and replacement reserves are required
- Annual audit of operations is required
- Hard second mortgages are not allowed. Soft seconds and stock pledge financing are allowed if properly structured.
Need A Loan For A Multifamily Project?
Contact Darach Advisors today for the best loan terms and pricing on Apartment Loans
Ralph DarunsSenior Managing Director
(972) 957-7350
rdaruns@darachadvisors.com
4943 Stony Ford Drive
Dallas, TX 75287-7236
Kathryn ThompsonSenior Partner
(214) 662-9012
kgthompson@darachadvisors.com
10455 North Central Expressway, Suite 109-332
Dallas, TX 75231
