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HUD 232/223(f) Loans
HUD-Insured Financing for Purchasing or Refinancing Senior Housing, Assisted Living, and Skilled Nursing Facilities
HUD 232/223(f) Financing
HUD 232/223(f) Loans for Acquiring or Refinancing Senior Living and Healthcare Facilities
While the HUD 232 loan is a fantastic way to build or rehabilitate senior properties, if you want to purchase a property as-is, or refinance a property you currently own with HUD financing, you'll probably need a HUD 232/223(f) loan instead.
Just like traditional HUD 232 loans, HUD 232/223(f) loans are designed for the financing of senior housing, assisted living, and skilled nursing facilities with 20 or more residents. Plus, these loans are fully assumable (with FHA approval), and are non-recourse.
It's not all good news, however. While the HUD 232/223(f)'s terms are incredible, loans can take around six to eight months to close. This loan is probably not the right choice for you if you're in a hurry.
Sample Terms for HUD 232/223(f) Loans in 2024
Size: Minimum loan of $2 million (typical loan averages $7.6 million)
LTV/Leverage:
Purchase:
Non-profits: The lesser of 90% of the acquisition price or appraised value
For profits: The lesser of 85% of the acquisition price or appraised value
Refinance:
For profits: The lesser of 85% of the appraised value or 100% of the cost to refinance
Non-profits: The lesser of 90% of appraised value or 100% of the cost to refinance
HUD/FHA Approved Full Property Appraisal
Borrower/Stakeholder Credit Reports
Phase I Environmental Assessment
Architectural/Engineering Report
Market Study
House 20 or more residents
Provide ongoing medical care for long-term patients
Be licensed by the appropriate municipal or state organization/agency
Have been constructed least three years ago, though newer property additions are allowed, as long as they are smaller than the original structure
Have no more than 20% of the project's gross area or gross income devoted to/derived from non-resident day care
Have no more than 25% of all units designated as independent living units
Have no more than 20% of the gross floor space filled and no more than 20% of the property's income derived from commercial tenants
Low, fixed interest rates
Loans are fully assumable (with FHA/HUD approval)
HUD 232/223(f) loans are non-recourse, limiting risks for developers
Borrowers/owners must regularly contribute to a replacement reserve fund
FHA application fees of 0.30% of the entire loan amount and FHA inspection fees of 0.50% of the entire loan amount are required
Requires both an initial, one-time MIP (mortgage insurance premium) at closing, as well as monthly MIPs throughout the life of the loan
Term: 35 years, fixed-rate
Amortization: Up to 35 years, fully amortizing
Minimum DSCR: 1.45x
MIP: HUD 232/223(f) MIPs include an MIP fee of 1% of the loan amount, paid at closing, and an annual MIP of 0.65%
Third-Party Reports:
HUD 232/223(f) loans require multiple third-party reports, including:
HUD 232/223(f) Eligible Properties
In order to be eligible for HUD 232/223(f) financing, a project must: