Hospitals, Acute Care and Critical
Access Hospital Construction and Renovation
Financing
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Rockport Mortgage Corporation is an FHA-approved
Mortgagee and actively provides financing
utilizing the FHA insurance programs nationwide.
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HUD 242
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Purpose
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FHA’s 242 Program
was designed to provide mortgage insurance
for new construction and renovations of
acute care and critical access facilities
nationwide. FHA insurance enables clients
to enhance their creditworthiness because
their debt is backed by the full faith
and credit of the United States Government.
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Eligible Borrowers
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Your facility must be an
acute care or critical access hospital
with no more than 50% of adjusted patient
days attributable to the following services:
chronic convalescence and rest, drug and
alcoholic, epileptic, nervous and mental,
mental deficiency, and tuberculosis. Through
the end of the project and for two fiscal
years thereafter, you must anticipate that
the adjusted patient days for the above
services will not exceed 50%. This 50%
criterion may be waived in the case of
critical access hospitals.
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242 Highlights
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- Non-recourse 25 year fixed rate fully
amortizing financing.
- Combined construction and permanent
financing with competitive interest rates
based on market conditions.
- Qualifies for government guaranteed
mortgage backed securities, credit enhancement
in conjunction with tax-exempt bonds,
or direct placement.
- Loan proceeds can be used for construction,
modernization, remodeling, capital equipment,
expansion, acquisition, and refinancing.
- Application processing can be completed
within 120 days from submission of a
complete and acceptable commitment application.
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Financial Data
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- Over the last three full fiscal years,
your average operating margin must have
been equal to or greater than 0.00 and
the average debt service coverage ratio
equal to or greater than 1.25.
- Loan to value may not exceed 90%.
Maximum loan term is 25 years fully amortizing.
There is no limit on the size of the
loan.
- A minimum of 20% of the proposed FHA
insured mortgage must be utilized for
facility renovations, rehabilitation
or the purchase of new equipment. Of
this 20%, half may be used for the purchase
of equipment.
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Fees
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There is no pre-application
fee for review to determine proposal acceptability.
All fees are reimbursable from loan proceeds.
The fees are as follows:
- FHA Application Fee - 0.15% is due
at loan application.
- FHA Commitment Fee - 0.15% of loan
amount is due at issuance of loan commitment.
- FHA Inspection Fee – 0.5% of
loan amount due at closing to cover physical
inspection of property.
- Mortgage Insurance Premium – 0.5%
of the outstanding loan amount paid annually
in advance.
- Financing Fee – Negotiated between
Rockport and Borrower.
- Mortgage Reserve Fund payable monthly
to equal one year of debt service after
five years, and two years of debt service
after 10 years.
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