What Properties are Eligible for HUD 232 Financing?
In order to be eligible for HUD 232 financing , properties need to meet a variety of eligibility requirements, including offering continuous care, being appropriately licensed, and having at least 20 patients. Keep reading to learn more about the eligibility requirements for HUD 232 loans.
Eligible Properties for HUD 232 Loans
In order to be eligible for HUD 232 financing, properties need to meet a variety of eligibility requirements, including offering continuous care, being appropriately licensed, and having at least 20 patients. Keep reading to learn more about the eligibility requirements for HUD 232 loans.
What are the HUD 232 Eligibility Requirements?
The full list of eligibility requirements for HUD 232 loans includes:
Facilities must offer ongoing, continuous care and oversight for individuals requiring long-term care or medical attention
Facilities must be licensed by an appropriate municipality or state body
Properties must have been completed at least three years prior (for acquisition or rehabilitation financing)
Additions less than three-years-old are acceptable, but cannot be larger than the original facility
Facilities must accommodate 20 or more patients requiring continuous or skilled nursing care
Non-resident day care must not exceed 20% of the property’s gross area and 20% of the gross income
Independent living units cannot make up more than 25% percent of all units
Commercial space must not exceed 20% of floor area or income
What types of properties are eligible for HUD 232 financing?
Properties eligible for HUD 232 financing must offer continuous care and be appropriately licensed. They must have at least 20 patients and independent living units cannot make up more than 25% of all units. Commercial space must not exceed 10% of the gross floor area of the project and 15% of the gross project income.
For more information, please visit https://www.hud232.loan/hud-232-faqs/eligibility-requirements and https://www.commercialrealestate.loans/hud-232-loans.
What are the requirements for HUD 232 financing?
The full list of eligibility requirements for HUD 232 loans includes:
- Facilities must offer ongoing, continuous care and oversight for individuals requiring long-term care or medical attention
- Facilities must be licensed by an appropriate municipality or state body
- Properties must have been completed at least three years prior (for acquisition or rehabilitation financing)
- Additions less than three-years-old are acceptable, but cannot be larger than the original facility
- Facilities must accommodate 20 or more patients requiring continuous or skilled nursing care
- Non-resident day care must not exceed 20% of the property’s gross area and 20% of the gross income
- Independent living units cannot make up more than 25% percent of all units
- Commercial space must not exceed 20% of floor area or income
For more detailed information, please refer to Chapter 14 of the Healthcare Mortgage Insurance Program Handbook (4232.1).
What are the benefits of HUD 232 financing?
HUD 232 financing has a variety of benefits for large-scale owners of senior properties, including:
- HUD 232 refinancing of multiple properties can greatly increase cash flow, potentially giving developers the capital to purchase or construct new assets
- HUD fixed-rate financing allows large companies to stabilize expenses and make accurate financial projections well into the future
- Low, fixed interest rates
- Loans are fully assumable (with FHA/HUD approval)
- HUD 232/223(f) loans are non-recourse, limiting risks for developers
What are the risks associated with HUD 232 financing?
The risks associated with HUD 232 financing include:
- Significant upfront costs
- Higher fees than conventional loans
- Longer application process than conventional loans
- Mortgage Insurance Premiums (MIP)
- HUD property inspections
- Annual audited operating statements
- Replacement reserve escrows
- Restrictions on owner distributions and cash out
How can I apply for HUD 232 financing?
You can apply for HUD 232 financing by filling out the form on our website to speak to a HUD/FHA loan expert. In order to be eligible for HUD 232 financing, properties need to meet a variety of eligibility requirements, including offering continuous care, being appropriately licensed, and having at least 20 patients. Additionally, a borrower must typically have experience successfully operating one or more facilities of the same kind that they intend to build or purchase. Eligible borrowers may either be a for-profit or a non-profit entity.
For more information, please visit our HUD 232 Loans and HUD 232/223(f) Loan pages.