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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® 232:


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 2-stage (Preliminary Application, followed by Firm Application).

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

  1. 90% of HUD Replacement Cost
  2. Maximum LTV as follows:
    • SNF/ILU: 80% (for profit, 85% (non-profit)
    • New construction ALF/MC: 75% (for profit), 80% (non-profit)
    • Sub rehab ALF/MC: 80% (for profit), 85% (non-profit)
  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 non-profit).
Ineligible Borrower Owner, operator, or any affiliates currently in bankruptcy, or filed/emerged from bankruptcy within prior 5 years.
Experience Owners, operators/management agents must demonstrate a successful track record commensurate with developing or rehabbing properties of similar type, size, and complexity. Similarly, an owner-operator must have at least 3 years ownership and operating experience. SNF Administrators must also have 3 years of experience.
Tax & Insurance Escrows Monthly deposits required.
Recourse Non-recourse, subject to HUD Regulatory Agreement.
Commercial Space Maximum 10% of gross floor area and maximum 15% of gross potential income. 20% vacancy rate applied. (Day care 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 1, declining 1% per year. Other pre-payment 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 non-refundable straight-to-firm HUD application, fee is the full 0.3%.
HUD Inspection Fee $5 per thousand of the mortgage amount for new construction and $5 per thousand 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 The 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 0.77% Market Rate; 0.45% Affordable; 1% MIP upfront at closing.


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