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

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

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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 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

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Commercial Space

Limited to 20% of net rentable area and 20% of effective gross income

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Borrower

Single asset, special purpose entity, either for profit or non-profit

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Loan Term and Amortization

35 years (fully amortizing)

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Recourse

Non-recourse

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Interest Rate

Fixed for term of loan and determined by market conditions at the time of rate lock

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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

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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

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Fees and Deposits

• Rate lock deposit - 0.5% refunded at closing

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Prepayment

Negotiable with the best pricing for 10 years of call protection (can be a combination of lockout and/or penalty)

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Assumption

Fully assumable, subject to HUD approval

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Escrows

Taxes and insurance are escrowed monthly.  Replacement reserve required and the monthly deposit amount determined in accordance with HUD guidelines

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