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)

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

5335 Meadows Road Suite 250 Lake Oswego OR 97035

503 624 5800

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