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Purpose FHA's Section 232 Program was recently amended to provide mortgage insurance for the refinance of conventional (non-FHA insured) nursing homes, intermediate care facilities, board and care homes and assisted living facilities (collectively, "Residential Care Facilities").
 
Eligible Borrowers Profit motivated, non-profit and public owners are eligible.
 
Maximum Term 35 years (fully amortizing) or 75% of the estimated remaining economic life whichever is less, with a minimum term of 10 years.
 
Maximum Loan Refinancing
the lesser of:
  1. 85% of the FHA's values
  2. Amount of debt serviced by 85% of NOI attributable to the real estate.
  3. 100% of HUD appraised transaction costs.
Acquisitions
the lesser of:
  1. 85% of FHA's value
  2. Amount of debt serviced by 85% of NOI attributable to the real estate
  3. 85% of HUD appraised acquisition costs
 
Personal Liability None
 
Prepayment Typically either closed for two years then open to prepayment at 8% penalty in year three, declining 1% per year.
 
FHA Application Process 0.3% of the loan amount
 
Mortgage Insurance Premiums
  1. 1% for the first year*
  2. 0.57% of the outstanding loan amount thereafter*
 
Seconday Financing Surplus cash notes are permitted, up to 7.5% of the project's value.
 
Repairs/Replacement Funds for repairs, deferred maintenance and capital improvements for up to 15% of value or $15,000 per unit can be included in the loan amount, subject to the 85% loan to value limitations.
 
Funding Qualifies for government guaranteed mortgage-backed securities or direct placement or may be used to credit enhance tax-exempt bonds.
 
Interest Rate Subject to market conditions
 
Territory Nationwide
 
Eligible Properties Residential Care Facilities (nursing homes, intermediate care facilities, board and care, and assisted living facilities) must be at least three years old and must provide the necessary space for a central kitchen (whether utilized or not) and group dining. If day care is provided, the day care program must be self supporting. A Residential Care Facility must be licensed and/or regulated by the state (or another political subdivision).*

Assisted living facilities and board and care or personal care facilities also must provide separate dwelling units and have supportive services available to assist residents in carrying out the activities of daily living, including common rooms and the facility necessary for the provision of the above-noted supportive services. Individual assisted living units may contain a kitchenette or full kitchen, and a full bath.*

 
HUD Healthcare Facilities
Property
Loan Amount
St. Thomas More
 (Hyattsville, MD)
$37,123,600
Suffield by the River
 (Suffield, CT)
$8,505,300
Bala Nursing & Retirement Center
 (Philadelphia, PA)
$12,626,400
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