Build, Acquire, or Refinance Your Senior Housing Facility With a HUD 232 or HUD 232/223(f) Loan
With 75 million baby boomers in the U.S., and an additional 3 million Americans turning 65 every year, there's never been a better time to build senior housing. Fortunately, the U.S. Department of Housing and Urban Development (HUD) offers long-term, fixed-rate, non-recourse loans through the HUD 232 and HUD 232/223(f) loan programs.
If you're looking to build a senior housing facility, assisted living home, or skilled nursing property, HUD 232 and HUD 232/223(f) loans provide some of the best terms in the industry-- and we can't wait to help you get started with this incredibly exiting form of financing.
HUD 232 Basic Information
The basic terms of the HUD 232 loan include:
Loan Purpose: Construction, acquisition, rehabilitation of properties intended for senior citizens.
Loan Size: Typical $2 million minimum (but average loan size is $7.6 million)
Loan Term:
10 year minimum, full amortizing
Up to 40 year fixed-rate term for new and rehabilitated properties
Up to 35 year fixed-rate terms for non-rehab acquisitions that can be funded with Government National Mortgage Association (GNMA) Mortgage Backed Securities
Skilled Nursing Facilities/Independent Living Units: 80% LTV (for profit), 85% LTV (non-profit)
Assisted Living Facilities:
New Construction: 75% LTV (for profit), 80% (non-profit)
Purchase: 80% LTV (for profit), 85% LTV (non-profit)
Substantial Rehabilitation: 80% LTV (for profit), 85% LTV (non-profit)
Or, 90% of HUD eligible replacement costs (whichever is less)
For borrower owned properties, 100% of the existing mortgage debt or 90% of the “as is” market value of the property before rehabilitation (95% for non-profits)
For properties that will be bought and substantially rehabilitated, 85% of the purchase price of the property or 90% of the current market value of the property before rehabilitation (95% for non profits)
This applies to Skilled Nursing Facilities/Independent Living Units as well
DSCR: 1.45x minimum DSCR, 1.11x minimum DSCR for HUD 232(i) fire safety loans
HUD 232/223(f) Basic Information
Projects that don't qualify for substantial rehabilitation or purchase under other HUD 232 loan programs may qualify for the HUD 232/223(f) program. This financing is available for borrowers who want to either purchase or refinance a senior living development. The terms of this loan product include:
Loan Purpose: Purchase or refinancing of properties intended for senior citizens.
Loan Size: Typical $2 million minimum (but average loan size is $7.6 million)
Loan Term: Minimum 10 years, maximum 35 years (or 75% of the remaining economic life of the property, whichever is less)
Leverage:
Purchase:
Lesser of 85 percent of the acquisition price or appraised value (for-profits)
Lesser of 90 percent of the acquisition price or appraised value (non-profits)
Refinance::
Lesser of 100 percent of the cost to refinance or 85 percent of appraised value (for-profits)
Lesser of 100 percent of the cost to refinance or 90 percent of appraised value (non-profits)
DSCR: 1.45x minimum DSCR
Tools for Brokers, Investors, and Developers
No matter who you are, if you're interested in HUD 232 or HUD 232/223(f) financing for a senior living development, we have the tools to help. Our helpful information sections cover subjects including:
Types of HUD 232 Loans (including refinancing and supplemental financing)
Terms, Qualifications, and Guidelines for HUD 232 financing
Plus, our site contains extremely specific information for developers, including:
A Construction Application Submission Checklist for HUD 232 construction loans
FHA financing for senior communities doesn't need to be a hassle. Simply click the button below to connect with a HUD 232 financing expert and get a free quote today!
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