Healthcare Construction or Substantial Rehabilitation

FHA 232 Termsheet
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Healthcare Construction or Substantial Rehabilitation FHA 232

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Loan Term

40 years

Interest Rate

Fixed rate, fully amortizing (preceded by interest-only period during construction)

Non-recourse

Non-recourse

Assumable

Fully assumable

Prepayment

10% year one, then declining 1% per year; and customizable

Commercial Space

No commercial space greater than 10% of gross floor area and 15% of gross income of the property

Borrower

A single asset SPE

Escrows

Preconstruction. Escrows required for taxes, interest reserves, insurance, working capital (4% of the loan), and initial operating deficit. Balances will be released to borrower after 6 consecutive months of break-even operations.

Post-Construction. Escrows required for taxes, insurance, and MIP and capital needs replacement reserves.

Davis Bacon Wages

Payment of prevailing wages for contractors and subcontractors

Third Party Reports

Appraisal, Environmental Report, and Capital Needs Assessment

DSCR/LTV Requirements

Mortgage Insurance Premium: .77% at HUD closing and annually thereafter (.45% for certain LIHTC projects)

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