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Healthcare
HUD 232
New Construction and Substantial Rehabilitation
Program Overview
Provides a construction loan that converts to a fully amortizing permanent loan for new construction or substantial rehabilitation of residential healthcare facilities.
Typical Terms
- Borrower Type
- For-Profit or Non-Profit single asset borrower entity
- Recourse / Guaranty
- Non-recourse
- Loan Term / Amortization
- Interest Only during construction, followed by 40-year fully-amortizing loan term
- Interest Rate
- Determined by market conditions and fixed for the full term of the loan
- Prepayment
- Negotiable. Typically, 10-year call protection with a combination of lockout and/or stepdown pre-payment penalty
- Assumption
- Loans are fully assumable, subject to HUD approval.
- HUD Application Fee
- 0.3% of the loan amount due at Firm Application submission
- HUD Inspection Fee
- 0.5% of loan amount for New Construction; 0.50% of Total Improvements for Substantial Rehab
- HUD MIP
- 0.77% per year for the construction period due at closing, and 0.77% annually thereafter
- 3rd Party Reports
- Appraisal, Market Study, Phase I Environmental, and Architectural and Cost Analysis
- Reserves
- Typical Tax and Insurance escrows (including MIP) and Replacement Reserves as determined by PCNA and program requirements
- Construction Wages
- Davis-Bacon wage rates are required
Eligible Property Types
- Skilled Nursing Facilities
- Assisted Living Facilities
- Board & Care Homes