HUD 232 Loan, a Janover property
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Build, Acquire, or Refinance Senior Housing and Healthcare Properties With HUD 232 or HUD 232/223(f) Loans
With 70 million baby boomers in the U.S., and an additional 3 million Americans turning 65 every year, there's never been a better time to build senior housing. Fortunately, the U.S. Department of Housing and Urban Development (HUD) offers long-term, fixed-rate, non-recourse loans through the HUD 232 and HUD 232 and HUD 232/223(f) loan programs. For investors and developers who want to build senior housing facilities, assisted living centers, or skilled nursing properties, HUD 232 and HUD 232/223(f) loans provide some of the best terms and lowest rates in the industry.
Keep reading below to learn more, or simply download our HUD 232/223(f) loan term sheet or our HUD 232 loan term sheet.
HUD healthcare programs
HUD 232 and HUD 232/223(f) basic information.
HUD program
HUD 232
- Fixed rate
- Fully amortizing
- Up to 40-year term
- Up to 85% LTV (nonprofit)
The basic terms of the HUD 232 loan include:
- Loan Purpose: Construction, acquisition, rehabilitation of properties intended for senior citizens
- Loan Size: $2 million minimum (average loan size is $7.6 million)
- Loan Term: 10-year minimum, fully amortizing
- Up to 40-year fixed-rate term for new and rehabilitated properties
- Up to 35-year fixed-rate terms for non-rehab acquisitions that can be funded with Government National Mortgage Association (GNMA) mortgage-backed securities
- Skilled Nursing Facilities/Independent Living Units: 80% LTV (for profit), 85% LTV (nonprofit)
- Assisted Living Facilities: New Construction: 75% LTV (for profit), 80% (nonprofit)
- Purchase: 80% LTV (for profit), 85% LTV (nonprofit)
- Substantial Rehabilitation: 80% LTV (for profit), 85% LTV (nonprofit)
- Or, 90% of HUD-eligible replacement costs (whichever is less)
- For borrower-owned properties, 100% of the existing mortgage debt or 90% of the “as is” market value of the property before rehabilitation (95% for nonprofits)
- For properties that will be bought and substantially rehabilitated, 85% of the purchase price of the property or 90% of the current market value of the property before rehabilitation (95% for nonprofits)
- This also applies to skilled nursing facilities/ independent living units
- DSCR: 1.45x minimum DSCR, 1.11x minimum DSCR for HUD 232(i) fire safety loans
HUD program
HUD 232/223(f)
- Purchase or refinance
- 35-year max term
- Up to 90% (nonprofit)
- 1.45x min DSCR
Projects that don't qualify for substantial rehabilitation or purchase under the HUD 232 loan program may qualify for the HUD 232/223(f) program. This financing is available for borrowers who want to either purchase or refinance a senior living asset. The terms of this loan product include:
- Loan Purpose: Purchase or refinancing of properties intended for senior citizens
- Loan Size: $2 million minimum (average loan size is $7.6 million)
- Loan Term: Minimum 10 years, maximum 35 years (or 75% of the remaining economic life of the property, whichever is less)
- Leverage: Purchase: Lesser of 85% of the acquisition price or appraised value (for-profits)
- Lesser of 90% of the acquisition price or appraised value (nonprofits)
- Refinance: Lesser of 100% of the cost to refinance or 85% of appraised value (for-profits)
- Lesser of 100% of the cost to refinance or 90% of appraised value (nonprofits)
- DSCR: 1.45x minimum DSCR
Tools and resources
Tools for brokers, investors, and developers.
If you're interested in HUD 232 or HUD 232/223(f) financing for a senior living development, we have the tools to help. Our information sections cover subjects including:
- Frequently Asked Questions
- Appraisal Requirements
- Types of HUD 232 Loans (including refinancing and supplemental financing)
- Terms, Qualifications, and Guidelines for HUD 232 financing
In addition, we have also provided our easy-to-read HUD 232 and HUD 232/223(f) term sheets.
For developers
Developer-specific information.
- State Approval Information
- Healthcare Documents
- Insurance Requirements
- Construction Application Submission Checklist for HUD 232 construction loans
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From the FAQs
Latest from the HUD 232 desk.
Sep 13, 2018
Who Can Take Out a HUD 232 Loan?
In order to take out a HUD 232 or HUD 232/223(f) loan , a borrower must typically have experience successfully operating one or more facilities of the same kind that they intent to build or purchase. In addition, a borrower must also usually be structured as a single asset, special purpose entity
Sep 13, 2018
Can You Get a Rate Lock on a HUD 232 Loan?
Like many other kinds of HUD loans, HUD 232 and HUD 232/223(f) loans offer rate locks at commitment. Unfortunately for borrowers, early rate locks are not typically allowed; however, borrowers should check with their individual lender to see if they might be available.
Sep 12, 2018
Are HUD 232 Loans Assumable?
When a loan is assumable, it means that it can be taken by another borrower, who will ‘assume’ the payments, as well as the ownership of the property. Fortunately for borrowers, HUD 232 and HUD 232/223(f) loans are fully assumable, with permission from the FHA/ HUD , and a 0.05% fee.
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