HUD FHA Section 232 New Construction for Healthcare Properties

Construction or substantial rehabilitation financing for healthcare related properties.

Hud 221 D4 Multifamily Construction

HUD FHA Section 232 Construction or Substantial Rehab for Healthcare Properties Program Overview

Section 232 provides rehabilitation and construction loans for healthcare properties collectively referred to as Residential Care Facilities. Property types include, skilled nursing, intermediate care, assisted living facilities and other special care properties.

  • Up to 40 year fixed rate terms
  • Up to 90% of estimated cost
  • One closing with permanent rate lock prior to commencement of construction loan
  • Available for licensed nursing home, assisted living, intermediate and memory care and skilled nursing
  • Non-recourse

HUD FHA Section 232 Construction Program Guidelines

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What You Need to Know About Section 232

Program descriptions, highlights and underwriting guidelines are helpful when considering if commercial mortgage program is right for you and your property. However, they don't always tell the whole story. Below is what you need to know about Section 232 Healthcare Construction Loan program that program guidelines and highlights don't tell you.

  • The general contractor must execute a guaranteed maximum price contract, provide a 100% performance and payment bond (or cash 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 mortgagor must retain a qualified arms-length supervisory architect during construction.
  • The property will be required to submit an annual audit of operations to HUD and lender.
  • Surplus cash may be distributed two times per year.
  • Full or partial compliance with ADA and UFAS requirements may be required.
  • A post-construction certification of actual costs will be required.
  • HUD requires that healthcare facilities maintain adequate liability insurance.
  • Any “off site” construction costs or demolition costs require separate funding by the mortgagor.

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