HUD 232(f)

HUD 232(f)

Section 232(f) provides FHA insured loans for residential care facilities, such as nursing homes, assisted living, and board & care facilities.

HUD 232(f) may be used for financing the purchase, refinance, construction, or substantial rehab of a project - or a combination of the above.

HUD Section 232(f) projects are processed using HUD's Lean Process, which employs standardized processes to obtain consistent and timely results.

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HUD 232(f)
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HUD Overview: 232(f)

HUD 232(f) overview - Refinance or purchase of nursing home, assisted living, and intermediate care
Eligible Properties
Licensed Nursing Homes, Assisted Living, Intermediate Care, and Board & Care
  • Must provide continuous protective oversight
  • Must offer three meals per day
  • Facility must be licensed by the state
  • Non-resident day care not to exceed 20% of gross area and 20% of gross income
  • May include up to 25% non-licensed independent living units
  • Three years must pass since last certificate of occupancy has been issued
Commercial Space
Limited to 20% of net rentable area and 20% of effective gross income
Borrower
Single asset, special purpose entity, either for profit or non-profit
Loan Term and Amortization
35 years (fully amortizing)
Recourse
Non-recourse
Interest Rate
Fixed for term of loan and determined by market conditions at the time of rate lock
Standard Loan Amount - Refinance
The lesser of:
  • 80% of fair market value (85% for non-profits)
  • Amount that results in a debt service coverage ratio of 1.45x based on the underwritten Net Operating Income
  • 100% of FHA's allowable transaction costs (90% for non-profit)
  • 100% of FHA's allowable costs less grants, public loans, and tax credits
Standard Loan Amount - Acquisition
The lesser of:
  • 80% of fair market value (85% for non-profits)
  • Amount that results in a debt service coverage ratio of 1.45x based on the underwritten Net Operating Income
  • 85% of FHA's allowable acquisition costs (90% for non-profits)
  • 100% of FHA's allowable costs less grants, public loans, and tax credits
Fees and Deposits
  • Rate lock deposit - 0.5% refunded at closing
Prepayment
Negotiable with the best pricing for 10 years of call protection (can be a combination of lockout and/or penalty)
Assumption
Fully assumable, subject to HUD approval
Escrows
Taxes and insurance are escrowed monthly.  Replacement reserve required and the monthly deposit amount determined in accordance with HUD guidelines