HUD FHA Section 242 Hospital Loans
HUD’s Office of Hospital Facilities administers the FHA Section 242 Mortgage Insurance Program, which provides FHA mortgage insurance to approved hospitals for low interest capital project loans, acquisitions and debt refinancings. Eligible projects include: hospital expansion, remodeling, and replacement, as well as equipment purchases, medical office buildings and clinics. HUD FHA 242 borrowers range from critical access hospitals to urban teaching facilities and national health systems.
As a HUD-licensed FHA mortgage bank, InnoVative Capital originates HUD FHA 242 insured mortgage loans for nonprofit, government-owned, and for-profit hospitals. InnoVative Capital’s proprietary FHA 242 hospital analytics have been at the forefront of the ongoing evolution of the FHA 242 Program.
Advantages of HUD FHA 242 Loans
-
Attractive Loan Terms
- No maximum loan amount.
- 25-year amortization.
- Fixed interest rates.
- Construction and permanent financing.
- Loan amounts are not subject to any annual federal funding limits.
- Long-term fixed rate loans with 25-year maturities plus construction term.
-
Maximum Leverage with Minimal Cash Outlay
- HUD FHA loan to value ratio limit is 90%.
- Loans fund up to 100% of project costs.
- Cashless loan closings are possible.
- By incorporating additional pledged assets HUD FHA loan amounts may cover 100% of project and transaction costs.
-
HUD FHA 242 Mortgage Insurance
- U.S. Government provides credit enhancement for HUD FHA 242 insured mortgage loans.
- With FHA 242, nonrated hospitals can access low interest long-term loans.
- Low interest rates improve financial feasibility and debt capacity.
- Low interest rate loans are available through the issuance of tax-exempt bonds or placement of Ginnie Mae collateralized mortgage loans.
HUD FHA 242 Mortgage Banking Services
Transaction and Project Planning Services
HUD FHA 242 Pre-Application
InnoVative Capital evaluates each client’s financial position to determine debt capacity, optimize project budgets, calculate required capital contributions, and structure necessary liquidity reserves. We outline supplemental revenue sources that may be available through tax support, government grants, corporate partnerships, physician recruitment and service-line modifications. InnoVative Capital’s CFO HELPER® analytics are incorporated into client reports, FHA submissions, and public presentations.
HUD FHA 242 Application and Loan Underwriting
As FHA mortgage banker, InnoVative Capital receives HUD’s invitation to submit its proprietary HUD FHA 242 mortgage insurance application. We oversee the development of all financial and project-related reports. InnoVative Capital negotiates HUD terms and conditions and accelerates the delivery of an HUD FHA 242 mortgage insurance commitment.
HUD Commitment, Financing and Loan Closing
Upon our receipt of the HUD FHA 242 mortgage insurance commitment, we assess the benefits of municipal bonds versus Ginnie Mae mortgage securities. Once a decision is made, InnoVative Capital works to close the loan. Thereafter, we provide cost-certification, loan monitoring and covenant compliance services.
“As our banker and advisor InnoVative Capital’s judgment was on target before and throughout the FHA process InnoVative Capital’s financial metrics right sized our project so we never exceeded our debt capacity limits and afterwards they financed our FHA 242 insured mortgage (THIS QUOTE IS INCOMPLETE)”
Knox Community Hospital