fha - 232 healthcare new construction / rehab

fha section 232Less

fha section 232

healthcare new construction or substantial rehabilitation loanLess
healthcare new construction or substantial rehabilitation loan

Platform Overview:

Platform Overview:

Less

This program provides non-recourse, assumable construction and permanent financing

to build new or substantially rehabilitate assisted living, memory care and intermediate

or skilled nursing facilities.

This program provides non-recourse, assumable construction and permanent financing

to build new or substantially rehabilitate assisted living, memory care and intermediate

or skilled nursing facilities.

Less

qualified properties

qualified properties

Less

New construction or substantial rehabilitation of assisted living, memory care and

intermediate or skilled nursing facilities.

New construction or substantial rehabilitation of assisted living, memory care and

intermediate or skilled nursing facilities.

Less
  • Maximum processing occupancy of 95%

  • Commercial space cannot exceed 10% of gross floor area or 15% of gross income

  • Independent living units cannot exceed 25% of total units or beds in the project (up to 30% with a waiver).

  • Maximum processing occupancy of 95%

  • Commercial space cannot exceed 10% of gross floor area or 15% of gross income

  • Independent living units cannot exceed 25% of total units or beds in the project (up to 30% with a waiver).

Less

maximum loan

maximum loan

Less

For new construction, the lesser of:

For new construction, the lesser of:

Less
  • (a) 80% (85% non-profit) of market value;

  • (b) A mortgage amount supported by a DSC of 1.45x;

  • (c) 100% of the transaction cost for a refinance, and 85% of the transaction cost for a purchase transaction. Recognizable transaction costs include repairs, initial replacement reserves, third party reports, closing costs, along with eligible existing indebtedness or purchase price.

  • (a) 80% (85% non-profit) of market value;

  • (b) A mortgage amount supported by a DSC of 1.45x;

  • (c) 100% of the transaction cost for a refinance, and 85% of the transaction cost for a purchase transaction. Recognizable transaction costs include repairs, initial replacement reserves, third party reports, closing costs, along with eligible existing indebtedness or purchase price.

Less

For substantial rehabilitation, loan amount is determined in the same fashion unless the mortgagor already owns the property. If the mortgagor owns the property, the cost

criterion equals the redevelopment cost plus the lesser of the existing indebtedness before

rehabilitation or 90% of the estimated value of the project before rehabilitation. For a

property to qualify for substantial rehabilitation, the cost of repairs, replacements and/or improvements to the existing property must exceed 15% of the project’s value after

completion (not including costs of an addition). Additionally, a property can qualify if two or more major building components are being substantially replaced (at least 50%), regardless of cost.

For substantial rehabilitation, loan amount is determined in the same fashion unless the mortgagor already owns the property. If the mortgagor owns the property, the cost

criterion equals the redevelopment cost plus the lesser of the existing indebtedness before

rehabilitation or 90% of the estimated value of the project before rehabilitation. For a

property to qualify for substantial rehabilitation, the cost of repairs, replacements and/or improvements to the existing property must exceed 15% of the project’s value after

completion (not including costs of an addition). Additionally, a property can qualify if two or more major building components are being substantially replaced (at least 50%), regardless of cost.

Less

maximum term

maximum term

Less
  • Lesser of 40-years (fully amortizing) plus construction period, or 75% of remaining  economic life. The minimum term is ten years.

  • Lesser of 40-years (fully amortizing) plus construction period, or 75% of remaining  economic life. The minimum term is ten years.

Less

Personal Liability

Personal Liability

Less
  • FHA loan is non-recourse

  • FHA loan is non-recourse

Less

Assumability

Assumability

Less
  • Yes, subject to FHA approval

  • Yes, subject to FHA approval

Less

Commercial Limitations

Commercial Limitations

Less
  • 10% of total net rentable area; 15% of effective gross income

  • 10% of total net rentable area; 15% of effective gross income

Less

fees and expenses

fees and expenses

Less
  • 0.30% application fee due at submission of application. Financing and permanent  placement fees of up to 3.5% are based on final loan amount, due upon commitment and payable at closing. HUD inspection fee for new construction is 0.5% of mortgage amount. Love Funding will charge a nominal processing fee.

  • 0.30% application fee due at submission of application. Financing and permanent  placement fees of up to 3.5% are based on final loan amount, due upon commitment and payable at closing. HUD inspection fee for new construction is 0.5% of mortgage amount. Love Funding will charge a nominal processing fee.

Less

mortgage insurance premium

mortgage insurance premium

Less
  • 0.77% of loan amount due at initial loan closing for each 12 months of construction term,  or part thereof; 0.77% of outstanding principal balance thereafter.

  • 0.77% of loan amount due at initial loan closing for each 12 months of construction term,  or part thereof; 0.77% of outstanding principal balance thereafter.

Less

other FHA requirements

other FHA requirements

Less
  • Working capital escrow of 4% of the loan amount is escrowed at closing. 2% of this escrow is used for construction contingencies and is refunded at final closing, if not used. The other 2% is for working capital and the unused portion will be refunded at  the later of 12 months after final closing or after 6 months of break-even occupancy .

  • Initial operating deficit escrow will be required and can be posted in cash or letter of credit. This is typically equal to 12-18 months of debt service and released upon property maintaining 1.45x debt service coverage for 3 consecutive months .

  • Short-term debt service reserve escrow may be required when new units are beingadded to the property. Unused portions will be returned after the project has maintained an average of the underwritten debt service coverage for a twelve month period after final closing

  • Any “off site” construction costs or demolition costs require separate funding by the mortgagor .

  • The general contractor must pay Davis-Bacon prevailing wage rates as required by the Department of Labor .

  • The mortgagor must retain a qualified arms-length supervisory architect during  construction 

  • A cost certification by the owner will be required after construction completion.

  • General contractors are required to submit a cost certification if there is an identity of interest with the borrower .

  • The general contractor must execute a lump sum or cost plus contract depending on relationship between owner and contractor, provide a 100% performance and payment bond (or cash escrow or letter of credit acceptable to FHA), and have liquid net worth equal to at least 5% of the project construction contract plus all other uncompleted construction work .

  • The client must pay for all third party reports, which include a market study, a phase I environmental assessment, a full appraisal, an architectural/engineering review and a cost analysis. Funds must be remitted to Love Funding and these contractors are engaged and paid by Love Funding directly .

  • Escrows for property taxes, insurance, MIP and replacement reserves required.

  • Working capital escrow of 4% of the loan amount is escrowed at closing. 2% of this escrow is used for construction contingencies and is refunded at final closing, if not used. The other 2% is for working capital and the unused portion will be refunded at  the later of 12 months after final closing or after 6 months of break-even occupancy .

  • Initial operating deficit escrow will be required and can be posted in cash or letter of credit. This is typically equal to 12-18 months of debt service and released upon property maintaining 1.45x debt service coverage for 3 consecutive months .

  • Short-term debt service reserve escrow may be required when new units are beingadded to the property. Unused portions will be returned after the project has maintained an average of the underwritten debt service coverage for a twelve month period after final closing

  • Any “off site” construction costs or demolition costs require separate funding by the mortgagor .

  • The general contractor must pay Davis-Bacon prevailing wage rates as required by the Department of Labor .

  • The mortgagor must retain a qualified arms-length supervisory architect during  construction 

  • A cost certification by the owner will be required after construction completion.

  • General contractors are required to submit a cost certification if there is an identity of interest with the borrower .

  • The general contractor must execute a lump sum or cost plus contract depending on relationship between owner and contractor, provide a 100% performance and payment bond (or cash escrow or letter of credit acceptable to FHA), and have liquid net worth equal to at least 5% of the project construction contract plus all other uncompleted construction work .

  • The client must pay for all third party reports, which include a market study, a phase I environmental assessment, a full appraisal, an architectural/engineering review and a cost analysis. Funds must be remitted to Love Funding and these contractors are engaged and paid by Love Funding directly .

  • Escrows for property taxes, insurance, MIP and replacement reserves required.

Less

CONTACT US NOW FOR INFORMATION

HOURS

Monday

-

9:00AM - 6:00PM

Tuesday

-

9:00AM - 6:00PM

Wednesday

-

9:00AM - 6:00PM

Thursday

-

9:00AM - 6:00PM

Friday

-

9:00AM - 6:00PM

Saturday

-

12:00PM - 5:00PM

Sunday

-

CLOSED

EMAIL, GIVE US A CALL OR SEND US A FAX
Less

EMAIL, GIVE US A CALL OR SEND US A FAX

Toll Free: 888-640-3444

Toll Free: 888-640-3444

Less

E-fax: 866-257-9609

E-fax: 866-257-9609

Less
A MOPRO WEBSITE
Less
A MOPRO WEBSITE