Subject to Davis-Bacon requirements.
Full escrows for property taxes and all
applicable insurance are funded at closing.
A Replacement Reserve account must be
established at closing and is made
immediately available for replacement of
short-lived depreciable items.
An escrow up to 2% of the mortgage amount
is required for Working Capital. This must be
funded by mortgagor with cash/letter of
An Operating Deficit escrow will be required
by HUD to cover anticipated operating losses
until sustaining occupancy is reached and
funded by cash or a letter of credit.
This is a non-recourse loan.
Long loan term - up to 40 years in addition
to the construction period, fully-amortizing.
Low, fixed interest rates.
v Loan-to-value ratio – Skilled Nursing Facility
(SNF) - up to 80% for a for-profit enterprise,
inclusive of major movable equipment, (85%
for a not-for-profit) for both New
Construction and Sub-Rehab.
Loan-to-value ratio – Assisted Living Facility
(ALF) - up to 75% for a for-profit enterprise
inclusive of major moveable equipment,
(80% for a not-for-profit) for New
Construction and 80% for a for-profit
enterprise (85% not-for-profit) for a Sub-
Most affirmative and negative loan
covenants typically found in conventional
loan agreements are eliminated.
Converts to permanent financing upon
completion at no extra cost.
Fully assumable, subject to CMI and HUD
Can be used as a credit enhancement for
tax exempt bonds.
Debt Service Coverage of 1.45.
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