Healthcare Commercial Loans
FHA financing is available for all of these healthcare properties and offer very attractive loan features:
Loan Types:
Here are the specific FHA loan features:
Acquisition and Refinance
The attractive features about FHA financing for new construction is the loan is designed as a combined construction-to-perm loan. This means your interest rate is locked in from the beginning and there is ONE closing. After receiving your occupancy permit, the loan automatically converts to the 40 year term.
So while an FHA takes longer to process, the loan features are definitely worth it for most developers or healthcare operators. In the case of a real time constraint to close quicker, bridge financing can be used to secure the purchase of land.
Major Rehab
The attractive feature about FHA financing is the ability to complete major rehab work on the property as part of the acquisition or for a healthcare operator who wants to rehab an existing facility.
The rehab loan is treated the same way as a new construction loan. The loan is designed as a combined construction-to-perm loan. This means your interest rate is locked in from the beginning and there is ONE closing. After receiving your occupancy permit, the loan automatically converts to the 40 year term.
So while an FHA takes longer to process, the loan features are definitely worth it for most developers and healthcare operators. In the case of a real time constraint to close quicker, bridge financing can be used to secure the purchase of the apartment building.
Conventional Financing
Conventional financing is available for such healthcare properties as:
Financing terms will be similar to multifamily loans.
To get started with obtaining a healthcare loan, review the Commercial Loan Services Section. My team and I look forward to helping you soon.
- Assisted Living Facility
- Board-and-Care Home
- Congregate Care Facility
- Hospital
- Independent Living Facility
- Intermediate-Care
- Skilled Nursing Facility
- Specialized Facilities: Alzheimer’s Facility and Drug and Alcohol Treatment Centers
Loan Types:
- Acquisition
- Refinance
- New Construction
- Substantial rehab
Here are the specific FHA loan features:
Acquisition and Refinance
- Loan-To-Value:
Acquisition:Up to 85% (90% for nonprofit). A seller carry-back note is allowed up to 7.5% of the purchase price. So you can feasibly leverage into a purchase with only 7.5% down payment.
Refinance: Up to 85% (no cash out is allowed)
- Term period: 35 years
- Amortization period: 35 years (self amortizing loan with no balloon)
- Interest rate: Usually based on a low spread above the 10-year Treasury
- Prepayment penalties: Yes, terms vary.
- Liability: NON-recourse
- Loan is assumable
- Qualifying criteria: The property supports itself without the need for the borrower’s personal income or credit.
- Minimum loan amount: There is no set minimum loan amount by FHA, however the lender may set a minimum loan amount. Also, FHA financing has a few additional loan costs that is easier to spread over a larger project. Therefore, an FHA loan is best suited for loan amounts around $2 million +
The attractive features about FHA financing for new construction is the loan is designed as a combined construction-to-perm loan. This means your interest rate is locked in from the beginning and there is ONE closing. After receiving your occupancy permit, the loan automatically converts to the 40 year term.
So while an FHA takes longer to process, the loan features are definitely worth it for most developers or healthcare operators. In the case of a real time constraint to close quicker, bridge financing can be used to secure the purchase of land.
- Loan-To-Cost: Up to 90% Developer’s fee of 10% can be used toward the down payment requirement. Land acquisition can be included in the financing.
- Term period: 40 years
- Amortization period: 40 years (self amortizing loan with no balloon)
- Interest rate: Usually based on a low spread above the 10-year Treasury
- Prepayment penalties: Yes, terms vary.
- Liability: NON-recourse for both construction period and permanent financing
- Loan is assumable
- Qualifying criteria: The property supports itself without the need for the borrower’s personal income or credit.
- Minimum loan amount: There is no set minimum loan amount by FHA, however the lender may set a minimum loan amount. Also, FHA financing has a few additional loan costs that is easier to spread over a larger project. Therefore, an FHA loan is best suited for loan amounts around $2 million +
Major Rehab
The attractive feature about FHA financing is the ability to complete major rehab work on the property as part of the acquisition or for a healthcare operator who wants to rehab an existing facility.
The rehab loan is treated the same way as a new construction loan. The loan is designed as a combined construction-to-perm loan. This means your interest rate is locked in from the beginning and there is ONE closing. After receiving your occupancy permit, the loan automatically converts to the 40 year term.
So while an FHA takes longer to process, the loan features are definitely worth it for most developers and healthcare operators. In the case of a real time constraint to close quicker, bridge financing can be used to secure the purchase of the apartment building.
- Loan-To-Cost: Up to 90%
- Term period: 40 years
- Amortization period: 40 years (self amortizing loan with no balloon)
- Interest rate: Usually based on a low spread above the 10-year Treasury
- Prepayment penalties: Yes, terms vary.
- Liability: NON-recourse for both construction period and permanent financing
- Loan is assumable
- Qualifying criteria: The property supports itself without the need for the borrower’s personal income or credit.
- Minimum loan amount: There is no set minimum loan amount by FHA, however the lender may set a minimum loan amount. Also, FHA financing has a few additional loan costs that is easier to spread over a larger project. Therefore, an FHA loan is best suited for loan amounts around $2 million +
Conventional Financing
Conventional financing is available for such healthcare properties as:
- Nursing home
- Congregate care home
- Assisted living facility
Financing terms will be similar to multifamily loans.
To get started with obtaining a healthcare loan, review the Commercial Loan Services Section. My team and I look forward to helping you soon.
1
Real Estate Investing Guides
