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HUD 242 (FHA Section 242) - Helping Hospitals Get Capital Financing

 
Catalog of Federal Domestic Assistance Number: 14.128
Program
web site		 http://portal.hud.gov/portal/page?_pageid=73,18270
38&_dad=portal&_schema=PORTAL
Sponsor U.S. Department of Housing and Urban Development
Deadlines Applications accepted on an ongoing basis
Purpose The Federal Housing Administration (FHA) helps hospitals access affordable financing for capital projects. Uses may include new construction, refinancing, and modernization, remodeling, equipment, and expansion.
Eligibility Facility must be an acute care hospital with no more than 50% of patient days attributable to the following services: chronic convalescence and rest, drug and alcoholic, epileptic, nervous and mental, mental deficiency, and tuberculosis. For Critical Access Hospitals (CAHs) this restriction does not apply.

If your state has a Certificate of Need process, a CON must be issued or pending.

You must grant the FHA-insured lender a first mortgage on the entire hospital, including property, plant, equipment, and receivables. (Note: Exceptions may include leased equipment, off-site property, capital associated with affiliations, etc.)

You must be willing to make monthly payments into a Mortgage Reserve Fund that will build to a balance equal to two years of debt service after ten years.

Over the last three full fiscal years, the hospital's average operating margin must have been equal to or greater than 0.00 and the average debt service coverage ratio equal to or greater than 1.25.
Geographic
coverage		 Nationwide
Amount of
funding		 Loan-to-value may not exceed 90%. Maximum loan term is 25 years. One-time fees total 0.8% of loan amount. Fixed annual premium is 0.5% of remaining balance. FHA insures 99% of the loan amount.
Application
process		 The first step of the application process is for HUD to perform a preliminary review of the hospital and the proposed project with information provided by the hospital and mortgage lender. Please see the program web site for application details.
 

For more information contact:
202.708.0599

Summaries of funding programs are provided by RAC for your convenience. Please contact the funder directly for the most complete and current information.