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: 

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  • 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
  • Leverage: 
    • Purchase:
      • 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 
    • Refinance:
      • 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

 

PROS:

  • 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

 

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cons:

  • 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!