HUD 232 loans allow for a small amount of commercial development, the exact amount of which varies by loan type. For HUD 232 new construction and substantial rehabilitation loans, commercial space is limited to "10% of the gross floor area of the project and 15% of the gross project income." If a space is only intended to serve the project's residents, it won't be counted towards the 10% area limit and 15% income limit.
In order to qualify for a HUD 232 loan for substantial rehabilitation, a project must meet one of two major requirements. Either the hard cost of any repairs and improvements must exceed 15% of the project's value after completion, or two or more major building components (ex. plumbing, electrical, roof) must be substantially replaced.
The Office of Residential Care Facilities (OCRF) is a subdivision of HUD's Office of Healthcare Programs (OHP) composed of healthcare industry professionals that oversees HUD-insured healthcare FHA 232 loan financing.
Yes, HUD 232 loans require borrowers to pay an MIP (Mortgage Insurance Premium), as both a one-time and an annual expense. MIP for these loans includes a 1% one time MIP assessment, payable at closing, and a 0.65% annual MIP charge, paid each year.
Just like other kinds of financing, HUD 232 loans have certain application fees, including a HUD application fee, an FHA inspection fee, and lender application fees. Keep reading below to see the entire list of typical fees for HUD 232 loans.
HUD 232 loans have a variety of advantages and disadvantages. Major advantages include the fact that these loans are fixed-rate, non-recourse, and offer incredibly high leverage, while major disadvantages include the high upfront costs, long waiting times, and annual audits that these loans require.
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.