Loan Programs
REGULAR APARTMENT ACQUISITION/REFINANCE
If an apartment property is not already insured by FHA, it can be refinanced under Section 223(f) of the National Housing Act. The processing requirements are more extensive than for 223(a)(7) programs because the property is not already in the FHA portfolio. The loan is non-recourse and fully assumable. Eligible properties include single buildings with five or more units or scattered site 5+ unit multifamily properties owned by the same entity. Non-residential commercial space is allowed up to 20% of gross square footage and 20% of gross income. The maximum loan to value ratio is the lesser of 83.3% of value for market rate, rate and term, and 80% of value for cash out. FHA mortgages also are constrained by statutory mortgage limits but this rarely is a constraint for refinance and acquisition transactions. The minimum debt service ratio for market rate is 1.20. The maximum term is the lesser of 35 years or 75% of remaining useful life of the property. This program offers the best terms and pricing for long-term fixed rate fully-amortizing multifamily and mixed-use property loans. There are additional program requirements. Please call us to discuss.
MULTIFAMILY NEW CONSTRUCTION/SUBSTANTIAL REHABILITATION PROGRAM
There are two FHA construction/perm programs for apartment properties: one is for for-profit sponsors (221(d)(4)) and one is for non-profit sponsors (221(d)(3)). As with all FHA commercial mortgage programs, these loans are non-recourse and fully assumable. The program for non-profit sponsors offers extremely competitive terms (max loan to value/cost ratio of 100%, minimum debt service coverage ratio of 1.05). Abuses of this program have necessitated significant oversight by HUD. If you are a non-profit entity and you wish to develop a multifamily project, please contact us and we will discuss the process for gaining preliminary approval to go forward with your financing application. The for-profit multifamily construction/perm program is not subject to the same HUD oversight that the non-profit program receives. Eligible properties must have five or more units. Non-residential commercial space is limited to 10% of gross square footage or 15% of gross income. The max loan to value/cost is 83.3% for market rate and there is a 10% builders/sponsors profit allocation that normally will cover project equity requirements. Land is valued at appraised value and not constrained by actual cost. Where land values are in excess of closing cash requirements, the owner will receive a cash distribution at the closing table. The minimum debt service coverage ratio for market rate is 1.20. The maximum mortgage is constrained by maximum per unit mortgage limits set by HUD. These limits are updated annually and adjusted for high-cost areas. Consult the HUD website to see current statutory mortgage limits. The maximum mortgage term is 40 years for new construction properties. Loan pricing will be better depending on the amount of call protection on the loan. There are additional program requirements. Please call us to discuss.
Download For Profit Term Sheet
Download Non Profit Term Sheet
STREAMLINED APARTMENT ACQUISITION/REFINANCE
The streamlined apartment refinance programs are set forth under Section 223(a)(7) of the National Housing Act. This program is available only for apartment properties that already are in the FHA mortgage insurance portfolio. As with all FHA commercial mortgage programs, the loan is non-recourse and fully assumable. There are no maximum or minimum loan limits. The maximum mortgage is the lesser of 90% of value, the original FHA mortgage amount or the total closing cost of the transaction (cash out is not allowed). The minimum debt service ratio is 1.111. The maximum term is the lesser of the remaining term of the original FHA mortgage plus 12 years or 75% of useful life. Processing requirements are significantly less than for other commercial mortgage programs. The benefits of this program include short processing time and low processing expenses. Through a reduced interest rate and extended amortization term, debt service costs can be significantly reduced. There are additional program requirements. Please call us to discuss.
REGULAR HEALTHCARE ACQUISITION/REFINANCE
If a sub-acute healthcare property is not already insured by FHA, it can be acquired or refinanced under Section 232 pursuant to Section 223(f) of the National Housing Act. The processing requirements are more extensive than for 223(a)(7) programs because the property is not already in the FHA portfolio. The loan is non-recourse and fully assumable. Eligible properties may include nursing homes, intermediate care, assisted living and board and care facilities with 20 or more beds. The facility must be state licensed. The maximum mortgage for market rate is the lesser of 83.3% of value or the total closing cost of the transaction (cash out is not allowed). The minimum debt service ratio for market rate is 1.20. The maximum term is the lesser of 35 years or 75% of remaining useful life of the property. This program offers the best terms and pricing for long-term fixed rate fully-amortizing healthcare property loans. There are additional program requirements. Please call us to discuss.
HEALTHCARE NEW CONSTRUCTION/SUBSTANTIAL REHABILITATION PROGRAM
The FHA construction/perm programs for sub-acute healthcare properties is Section 232 of the National Housing Act. The loan is non-recourse and fully assumable. Eligible properties may include nursing homes, intermediate care, assisted living and board and care facilities with 20 or more beds. The facility must be state licensed. Non-residential commercial space must be a compatible use. The max loan to value/cost for market rate is 83.3% and there is a 10% builders/sponsors profit allocation that normally will cover project equity requirements. Land is valued at appraised value and not constrained by actual cost. Where land values are in excess of closing cash requirements, the owner will receive a cash distribution at the closing table. For market rate, the minimum debt service coverage ratio is 1.20. Unlike the multifamily program there are no maximum mortgage limits set by HUD. The maximum mortgage term is the lesser of 40 years or the term of the certificate of need for new construction properties. There are additional program requirements. Please call us to discuss.
