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How Big is Small Cap Multifamily?

A closer look at the multifamily housing inventory in the United States and the size of the small cap investment opportunity.

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Multifamily Forecast: Investors Moving to Secondary Markets

The apartment sector has remained the darling of the commercial real estate for the past six years. This doesn’t appear to be changing anytime soon, as 2016 is expected to set a new record for multifamily mortgage origination volume. While multifamily’s position as top dog remains uncontested, savvy investors are altering their strategy for sourcing Read the full article…


FHA® 242:


Arbor provides FHA-insured loans for acute care hospital facilities ranging from large teaching institutions to small rural critical access hospitals. The FHA helps hospitals access affordable financing for capital projects. Uses include new construction, refinancing, modernization, remodeling, equipment and expansion.

Loan Term Varies by program (see Program Selection Criteria below)
Program Selection Criteria
    242 New construction, or rehab/addition of existing hospital

  • At least 20% of loan amount used for construction, rehab, repairs and equipment (CRRE)
  • Loan sized at lesser of 90% LTC, 90% LTV or minimum 1.25 DSC
    242/223f Acquisition or refinance of existing hospital

  • < 20% of loan used for CRRE
  • Hospital construction must have been completed two years prior to HUD application submission
  • Loan sized at lesser of 90% LTC, 90% LTV, or average 1.25 DSC last three years and minimum average breakeven operating margin last three years
    242/223a7 Refinance of existing HUD-insured hospital loan

  • <20% of loan used for CRRE
  • Loan size limited to HUD original loan amount
  • Loan term may be extended by 12 years, not to exceed lesser of 25 years, or original HUD loan term
    242/241a Supplemental loan for repairs, additions, improvements for existing HUD-financed hospitals

  • 20% or greater CRRE
  • Loan sized at lesser of 90% LTC, 90% LTV or minimum 1.25 DSC (combined)
  • Construction loan term followed by permanent loan term co-terminus with existing HUD first mortgage
Amortization Fully amortizing
Fixed Rate Fixed rate for the full term of the mortgage
Operations and Lien Priority
  • Greater than 50% acute-care patient days
  • First lien on hospital real estate and accounts receivable
HUD Inspection Fee
  • 242 and 242/241a programs: 0.5% of CRRE
  • 242/223f and 223a7 programs: varies between 0.1% and 0.4% depending on CRRE
Mortgage Reserve Fund 0.2% of loan amount escrowed each year during years 1-10 of the loan term
HUD Mortgage Insurance Premium (MIP)
  • 242 0.70% per year
  • 242/223f 1% upfront; 0.65% per year
  • 242/223a7 0.50% upfront; 0.55% per yearr
  • 242/241a 0.65% per year
Eligible Borrower The mortgagor shall be a public mortgagor (i.e., an owner of a public facility), a private nonprofit corporation or association, or a profit-motivated mortgagor meeting the definition of “hospital” in §242.1; the mortgagor shall be approved by HUD and, except in those cases where the hospital is leased (as permitted in §242.72), shall possess the powers necessary and incidental to operating a hospital; eligible proprietary or profit-motivated mortgagors may include for profit corporations, limited partnerships, and limited liability corporations and companies, but may not include natural persons, joint ventures and general
partnerships; any proposed mortgagor must demonstrate that it has a continuity of organization commensurate with the term of the mortgage loan being insured; for new organizations, or those whose continuity is necessarily dependent upon an individual or individuals, broad community participation is required
Recourse Nonrecourse, subject to HUD Regulatory Agreement
Required Reports Study of market need and financial feasibility, Phase I Environmental and Appraisal
Prepayment Typically 10-year lockout, then prepayable at par
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs
Origination Fee Negotiable
HUD Application Fee A commitment fee that, when added to the application fee, will aggregate $3 per $1,000 (.03%) of the amount of the loan set forth in the HUD commitment and will be paid within 30 days of the date of issuance of the commitment; if such fee is not paid within this 30-day period, the commitment will automatically terminate
HUD Inspection Fee 0.5% of the mortgage amount for new construction or sub-rehabilitation. Between 0.10% and 0.40% for 5% to 19% hard costs.
Legal/Closing Fee Borrower pays Arbor’s counsel fee and miscellaneous closing costs
Davis Bacon Davis Bacon wage requirements apply to new construction and/or sub-rehabilitation; not required on repairs pursuant to 242/223(f) or 242/223a7


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