HUD 232/223(f) Loans
Purchase and refinance loans for senior living properties
The HUD 232 loan program is often a fantastic way for developers to build or substantially rehabilitate a senior housing, assisted living, or skilled nursing project. However, the traditional HUD 232 loan doesn't offer much in the way of as-is purchases of healthcare properties or refinances of properties that a developer currently owns; and that's where HUD 232/223(f) loans really begin to shine. Just like the traditional HUD 232 loan, HUD 232/223(f) loans use HUD 232 LEAN processing, reducing approval times, and are intended for financing facilities with 20+ patients. And, like all HUD multifamily loans, these loans are non-recourse, offer generous leverage allowances, and are assumable with FHA approval.
At Commercial Real Estate Loans, Inc., we're excited to help developers and investors fulfill America's need for safe, high-qualify senior housing. With the demand for senior housing in the U.S. constantly expanding, the industry has a lot of room for growth-- and HUD multifamily loans-- like the HUD 232 and HUD 232/223(f) loans, are some of most affordable ways to support that growth.
HUD 232/223(F) Loan Terms
HUD 232/223(f) loans have terms including:
- Loan Purpose: As-is purchase or refinancing of healthcare properties, including senior living, assisted living, or skilled nursing facilities
- Loan Size: $2 million+
- Loan Term: 35 years, fixed-rate
- For profits: 85% of the acquisition price or appraised value, whichever is less
- Non-profits: 90% of the acquisition price or appraised value, whichever is less
- For profits: 85% of the appraised value or 100% of the cost to refinance, whichever is less
- Non-profits: 90% of apprasied value or 100% of the cost to refinance, whichever is less
- DSCR: 1.45x minimum DSCR
- HUD 232/223(f) loans have fixed interest rates
- Loans are fully assumable with FHA approval
- HUD 232/223(f) loans are non-recourse, which restricts liability for developers/investors
- Very lenient leverage requirements
- Mortgage insurance premiums (MIPs) are still required
- These loans require an FHA application fee of 0.30% of the entire loan amount
- These loans also require an FHA inspection fee of 0.50% of the loan amount (which can be funded with the loan itself)
- Like other HUD multifamily loans, the HUD 232/223(f) loan requires that a developer make regular payments into a replacement reserve fund
What properties are eligible for HUD 232/223(f) loans?
In order to qualify for HUD 232/223(f) financing, healthcare properties must meet certain requirements, including:
- All facilities are required to be licensed by the proper city or state government agency
- Project construction must be finished at least 3 years before purchase (for acquisitions)
- If an addition has been built in the last 3 years, it must be smaller than the original building
- Projects must be able to assist at least 20 patients in need of continuous/skilled medical care
- Day care for non-residents must account for less than 20% of the property’s gross area and less than 20% of its gross income
- Commercial space must be equal to or less than 20% of the project's gross area, and contribute less than 20% of its gross income
- No more than 25% of the project can consist of independent living units
Commercial Real Estate Loans, Inc. is the partner you need to help acquire or refinance your next healthcare facility. Whether you're a new company or a long-established enterprise, we have the knowledge and experience to give you more financing options!