HUD 232/223(f) Loans
HUD 232/223(f) Loans HUD-Insured Loans for the Purchase and Refinancing of Senior Housing, Assisted Living, and Skilled Nursing Projects
Purchase and Refinance Loans for Senior Living Properties
The HUD 232 loan program is an effective way for developers to build or substantially rehabilitate a senior housing, assisted living, or skilled nursing project. However, the traditional HUD 232 loan cannot finance as-is purchases or refinances of properties. That's where HUD 232/223(f) loans can be utilized.
Like HUD 232 loans, HUD 232/223(f) loans use HUD 232 LEAN processing, reducing approval times, and are intended for financing facilities with 20+ patients. And, like all HUD multifamily loans, these loans are non-recourse, offer generous leverage allowances, and are assumable with FHA approval.
At Commercial Real Estate Loans, we're committed to helping developers and investors fulfill America's need for safe, high-qualify senior housing. With the demand for senior housing in the U.S. constantly expanding, the industry has a lot of room for growth, and HUD multifamily loans, like the HUD 232 and HUD 232/223(f) loans, are some of most affordable ways to support that growth.
HUD 232/223(f) Loan Terms in 2024
HUD 232/223(f) loans have terms including:
Loan Purpose: As-is purchase or refinancing of healthcare properties, including senior living, assisted living, or skilled nursing facilities
Loan Size: $2 million+
Loan Term: 35 years, fixed-rate
Leverage:
Purchase:
For profits: 85% of the acquisition price or appraised value, whichever is less
Non-profits: 90% of the acquisition price or appraised value, whichever is less
Refinance:
For profits: 85% of the appraised value or 100% of the cost to refinance, whichever is less
Non-profits: 90% of appraised value or 100% of the cost to refinance, whichever is less
DSCR: 1.45x minimum DSCR
Pros
HUD 232/223(f) loans have fixed interest rates
Loans are fully assumable with FHA approval
HUD 232/223(f) loans are non-recourse, which restricts liability for developers/investors
Lenient leverage requirements
Cons
Mortgage insurance premiums (MIPs) are still required
These loans require an FHA application fee of 0.30% of the entire loan amount
These loans also require an FHA inspection fee of 0.50% of the loan amount (which can be funded with the loan itself)
Like other HUD multifamily loans, the HUD 232/223(f) loan requires developers to make regular payments into a replacement reserve fund
What Properties are Eligible for HUD 232/223(f) Loans?
In order to qualify for HUD 232/223(f) financing, healthcare properties must meet certain requirements, including:
All facilities must be licensed by the proper city or state government agency
Project construction must be finished at least 3 years before purchase (for acquisitions)
If an addition has been built in the last 3 years, it must be smaller than the original building
Projects must be able to assist at least 20 patients in need of continuous/skilled medical care
Day care for non-residents must account for less than 20% of the property’s gross area and less than 20% of its gross income
Commercial space must be equal to or less than 20% of the project's gross area, and contribute less than 20% of its gross income
No more than 25% of the project can consist of independent living units
Commercial Real Estate Loans is the partner you need to help acquire or refinance your next healthcare facility. Whether you're a new company or a long-established enterprise, we have the knowledge and experience to give you more financing options.
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