HUD 223(f) Loans and Senior Housing Communities
If you're interested in acquiring or refinancing a senior housing community, can you use a HUD 223(f) loan to do so? Well, it depends. Senior, or age-restricted communities, are defined by HUD as any development intended for residents 62 years and older. And, while age-restricted communities are eligible for HUD 223(f) loans, some of them might offer services that make them ineligible.
Specifically, projects that are not eligible for HUD 223(f) financing include:
Assisted living facilities
Skilled nursing facilities
Memory care facilities (including Alzheimer's/Dementia care)
Developments with communal dining areas
Only independent living facilities, in which seniors do not get any assistance from the project itself, are eligible for HUD 223(f) financing. Meal services can be offered, but group dining facilities are not permitted.
Many Developers are Using HUD 232 and HUD 232/223(f) Loans to Finance Senior Communities
In general, investors or developers interested in acquiring or refinancing assisted living or skilled nursing facilities with a HUD multifamily loan turn to the HUD 232 and HUD 232/223(f) programs, which are specifically designed for the financing of senior properties. While HUD 232 loans permit the construction of new properties, HUD 232/223(f) loans are intended for refinancing and acquisition. These loans also permit the financing of independent living facilities. However, these loans typically offer slightly lower LTV allowances than a comparable HUD 223(f) loan.