Articles

Understanding the Impact of Wildfires on Rental Property Insurance

From California to Maui, the frequency and scope of wildfire events are rising, causing insurance markets and public agencies to reevaluate property in areas at risk for catastrophic damage. As a result, rental housing providers are seeing greater limitations to coverage, higher premium prices, and, in some cases, a total absence of viable private insurance — a trend detailed in the NMHC 2023 State of Multifamily Risk Survey and Report. This troubling new trend has placed many rental housing operators in a bind where they must simultaneously contend with the declining availability and affordability of insurance options.

Articles

Five Advantages of FHA Multifamily Construction Loans

In the last three years, multifamily construction has reached levels not seen since the 1980s, supported, in part, by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) loans. If you are exploring the acquisition, refinancing, rehabilitation, or new construction of conventional multifamily, affordable housing, seniors housing, or a healthcare facility, consider FHA multifamily construction loans, a stable financing option with excellent terms and many other attractive advantages.

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Where are Single-Family Rental (SFR) Rents Rising the Fastest?

While the single-family rental (SFR) sector’s rent growth averages have retreated from record highs, structural tailwinds are keeping price growth positive — both nationally and in major SFR markets. In this research brief, Chandan Economics and Arbor Realty Trust analyze DBRS Morningstar data, which covers the top 20 MSAs by SFR activity, to discover the metropolitan areas where SFR rent growth is the hottest right now.

Articles

Fannie Mae Small Loans Cap Raised to $9 Million

Fannie Mae recently announced that its Small Loan cap has increased from $6 million to $9 million for all loans committed as of August 22, 2023. Multifamily borrowers and lenders have praised the change to the Fannie Mae Small Loans program, which will encourage greater investment in a rapidly growing sector where demand remains high despite market volatility.

Articles

The Top Five Emerging Metros for Retiree Relocation

As Baby Boomers reach retirement age, their evolving geographic preferences are strengthening housing markets and local economies in new locations, which feature attractive climates, relative affordability, and ample outdoor activities. With swelling populations of senior citizens, our top five emerging metropolitan areas for retiree relocation are fertile ground for multifamily real estate investment.

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GENERAL: 800.ARBOR.10

FHA® 232:

HEALTHCARE NEW CONSTRUCTION AND SUBSTANTIAL REHAB

Arbor provides FHA-insured, long-term, fixed-rate financing for new construction or substantial rehabilitation of assisted living, congregate care and nursing home facilities nationwide. Arbor uses the LEAN program to expedite underwriting and approval. Applications may be processed either as single-stage (firm application), or two-stage (preliminary application, followed by firm application).

Loan Term & Amortization Construction loan period (interest-only), followed by 40-year permanent (fully amortizing)
Maximum Loan to Value-
New Construction
& Substantial Rehab
Determined by the lowest of:

  1. 90% of HUD replacement cost
  2. Maximum LTV
    • SNF/ILU: 80% (for profit), 85% (nonprofit)
    • New construction ALF/MC: 75% (for profit), 80% (nonprofit)
    • Sub rehab ALF/MC: 80% (for profit), 85% (nonprofit)
  3. DSCR: 1.45x
Fixed Rate Yes – construction and permanent
Eligible Properties New construction or substantial rehabilitation of assisted living; memory care; and intermediate, skilled nursing facilities, or combination thereof

  • Maximum processing occupancy of 95%
  • Commercial space cannot exceed 10% of gross floor area or 15% of gross income
  • Independent living units cannot exceed 25% of total units in the project (up to 30% if waiver is granted)
Ineligible Properties Life-care-fee CCRC; LTAC (long-term acute care), adult day or currently in bankruptcy
Eligible Borrower Single asset entity (for profit or nonprofit)
Ineligible Borrower Owner, operator or any affiliates currently in bankruptcy, or filed/emerged from bankruptcy within prior five years
Experience Owners, operators/management agents must demonstrate a successful track record commensurate with developing or rehabbing properties of similar type, size and complexity; an owner-operator must have at least three years’ ownership and operating experience; SNF administrators must also have three years of experience
Tax & Insurance Escrows Monthly deposits required
Recourse Nonrecourse, subject to HUD Regulatory Agreement
Commercial Space Maximum 10% of gross floor area and maximum 15% of gross potential income; 20% vacancy rate applied (daycare space is not considered commercial)
Required Reports Market Study, Appraisal, Architect Review of Construction Costs and Drawings and Phase I Environmental
Prepayment Typically 10% year one, declining 1% per year; other prepayment options available subject to market conditions
Assumable Subject to Arbor and HUD approval and payment of assumption fee
Good Faith Deposit Negotiable based on project type
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs
Origination Fee Negotiable
HUD Application Fee 0.15% due to HUD at pre-application, 0.15% at firm application; if borrower chooses nonrefundable straight-to-firm HUD application, fee is the full 0.3%
HUD Inspection Fee $5 per $1,000 (0.5%) of the mortgage amount for new construction and $5 per $1,000 (0.5%) of improvement costs for substantial rehabilitation
Legal/Closing Fee Borrower pays Arbor’s counsel fee and miscellaneous closing costs
Rehabilitation Qualifications > 15% of the “as rehabbed” appraised value, or replacement of at least two major building systems
Davis Bacon Davis Bacon labor standards and wage requirements apply to construction and rehab work
Licensing Borrower must provide to HUD evidence/documentation from the appropriate local/state tax licensing authorities showing approval for the operation of the project (or applicable portions thereof) prior to occupancy of the project (or applicable portion thereof)
HUD Mortgage Insurance Premium (MIP) 0.77% market rate; 0.45% affordable; 1% MIP upfront at closing

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