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DAVID WHO?

We’re pleased to bring back our “Top 10” segment, but in the interest of reaching a younger demographic, we’ve eliminated the reference to the former late-night talk show host in our lead. Or did we?

Anyway, here are 10 things to consider about using HUD financing for the development or refinancing of active adult communities.



  1. Who is an active adult? The industry definition is someone 55 years of age and older.
  2. But HUD’s version is someone 62 years of age and older.
  3. HUD financing for new projects is limited to “age-restricted” communities, i.e., 62 years of age, either for head of household only or all residents.
  4. Projects are prohibited from having central kitchens, dining facilities and mandatory meal programs. Optional services, i.e., housekeeping, laundry, transportation, etc., may be allowed provided the net income from these services is excluded from the underwriting. 
  5. Construction loans for market-rate projects are the lesser of 85% loan to cost; 1.176 debt service coverage; and statutory unit limits.
  6. Refinancing loans for existing, market-rate communities are the lesser of 85% loan to value (80% for cash-out), 1.176 debt service coverage; and statutory unit limits. 
  7. Applications for refinancing loans can be filed one month after the project meets the minimum debt service coverage ratio; loans can close after three months of coverage are reached. 
  8. Affordable and broadly affordable deals have more favorable loan and debt service coverage ratios.
  9. Refinancing loans for communities for residents aged 55 and over are available if the project meets HUD’s definition of affordable. 
  10. Age restricted communities located on campuses with other forms of senior housing that can provide services on an “ala carte” basis typically will have a better chance of success.  

Loans based on statutory unit limitations and HUD’s definition of affordable housing could each have its own Top Ten list; you might see them in the future.

But if you cannot wait – contact us for more information!

Sims Mortgage Funding