Assisted Living Facility Loans
Long Term, Low Interest Construction Financing For Skilled Care And Assisted Living Facilities
FHA 232 Assisted Living Facility loans are used for new construction or substantial rehabilitation of Skilled Care, Assisted Living, Nursing, Memory Care and Bed & Board facilities. FHA 232 assisted living facility loans are the only 40-year fixed-rate, fully amortizing, 90% LTV, non-recourse assisted living facility loans in existence.
Assisted Living Facility Loans, Nursing Home Loans, Intermediate Care Loans, and Board and Care
- Must provide continuous protective oversight;
- Must offer three meals per day;
- Facility must be licensed by state;
- Non-resident day care not to exceed 20% of gross area and 20% of gross income; and
- May include up to 25% non-licensed independent living units
Maximum Loan Term
40 years – not to exceed 75% of remaining economic life after the construction period
No more than 25% of the units can be for Independent Living
Non-recourse for monetary default, “bad boy” carve-outs excepted
For-profit individuals and entities and not-for-profit single asset entities
Typically closed for 3 years then pre-payable year 4 at 107% of par declining 1% per year. Shorter lock-outs are obtainable at a higher note interest rate
Maximum Loan Refinancing
New Construction – The lesser amount of:
- 90% of stabilized value (95% for Not-For-Profits).
- 90% of mortgageable replacement cost (95% for Not-For-Profits)
- Amount debt serviced by 90% of the estimated NOI attributable to realty (95% for Not-For-Profits)
- 100% of mortgageable costs less grants, public loans and tax credits
- FHA Statutory mortgage limits (FHA statutory loan limits are subject to adjustment based on the location of the project.
- 90% of stabilized value (95% for Not-For-Profits)
- Amount debt serviced by 90% of estimated NOI attributable to realty (95% for Not-For-Profits)
- If owned – 100% of hard and soft costs plus the lesser of (a) existing debt or (b) 90% of existing value
- 100% of mortgageable costs less grants, public loans, and tax credits
Market interest rates change daily. Call for quote.
FHA Application Fee and Inspection Fee
0.3% of the loan amount due at application and .5% of construction loan amount due at closing
3rd Party Costs
$15,000 to $30,000 depending on size and complexity
.57% of declining loan amount per annum ( .85% for LIHTC transactions)
Repairs, deferred maintenance or capital improvements up to of 15% of value or $6,500 per unit plus one major system (adjusted for area) can be included in loan.
Risk-based Maximum Loan Amounts
FHA has established risk thresholds that cannot be exceeded except in exceptional cases –
- 75% loan-to-value for new construction assisted living
- 80% loan-to-value for new construction Assisted Living Facilities
- 1.45 debt service coverage ratio for all projects
- Strong not-for-profits are eligible for a 5% LTV increase
- Maximum loan-to-cost remains 90% (95% for Not-For-Profits)
- Certificates of Occupancy dated three years prior to date of application for existing properties (subject to waiver)
- Pre-review is required by HUD
- Davis Bacon prevailing wage requirement apply
- A replacement reserve will be funded at closing
- Escrows for property taxes, insurance, and replacement reserves are required
- Annual audit of operations is required
- Hard second mortgages are not allowed. Soft seconds and stock pledge financing are allowed if properly structured.
Need an Assisted Living Facility loan? Apartment Financing America offers the only fixed-rate, 40 year, non-recourse assisted living facility loans in the nation.