HUD Archives: News Releases

HUD No. 22-152
HUD Public Affairs
(202) 708-0685
For Release
August 18, 2022

Federal Housing Administration Implements Residential Care Facility "Green Mortgage Insurance Premium" Reductions

Guidance issued today explains how lenders participating in FHA's Section 232 Mortgage Insurance for Residential Care Facility program can obtain mortgage insurance premium reductions on mortgages for eligible "green" facilities

Federal Housing Commissioner: Green MIP pricing will "support the Biden-Harris Administration's climate goals and HUD's Climate Action Plan"

WASHINGTON - The Federal Housing Administration (FHA) announced today that is has issued implementation guidance for lenders to obtain a reduction of upfront and annual mortgage insurance premiums (MIP) on most Section 232 Residential Care Facility mortgages for subject properties that meet industry-recognized green building certifications and that will achieve meaningful and measurable energy and water efficiency improvements. Announced in its May 19, 2022 (, and August 12, 2022 (, Federal Register notices, the "Green MIP" reductions decrease both capitalized upfront MIP and annual MIP rates to 25 basis points. The new rates go into effect for mortgages on eligible facilities for FHA mortgage insurance firm commitments issued or reissued on or after October 1, 2022.

"We want to make sure that the imperative to address climate change is compatible with the need to ensure the availability of residential care in communities," said Federal Housing Commissioner Julia Gordon. "The Green MIP pricing will provide financial incentives to increase the energy and water efficiency of these facilities, which will not only support the Biden-Harris Administration's climate goals and HUD's Climate Action Plan, but also ultimately reduce operating costs for these facilities."

This reduction is designed to encourage owners of nursing homes, assisted living facilities, board and care homes, and intermediate care facilities to adopt standards for construction, rehabilitation, repairs, maintenance, and property operations that are more efficient and sustainable than are customary for such facilities.

About Section 232 "Green MIP" Reductions
For mortgages on properties that meet the "Green MIP" requirements contained in today's Mortgagee Letter, the implementation:

  • Reduces annual capitalized up-front MIP rates from an existing 45-100 basis points to 25 basis points for Section 2 32 New Construction/Substantial Rehabilitation, 223(f) Purchase or Refinance, 223(a)(7) Refinance, and 241(a) Repairs, Additions, and Improvements programs.
  • Reduces annual MIP rates, which are generally between 45 and 77 basis points, to 25 basis points.
  • Generates an estimated savings to a borrower of $93,000 in upfront mortgage insurance premiums on an average FHA Section 232/223(f) transaction for an insured loan of $12.5 million, and tens of thousands of dollars in annual mortgage insurance premiums.
  • Applies to new and substantial rehabilitation Section 232 mortgage insurance applications for which the owner of the facility demonstrates in its application to FHA that the property will achieve a specified industry-recognized standard for green building certification and will achieve meaningful, measurable energy and water efficiency improvements.
  • Allows reduced MIP rates on refinance transactions for properties that have already achieved a specified green building standard certification as long as the proceeds are used to complete further efficiency upgrades and achieve the next-level green certification standards, where applicable.

About FHA's Section 232 Mortgage Insurance for Residential Care Facilities Program

FHA's Office of Healthcare Programs manages the Section 232 Mortgage Insurance Program for Residential Care Facilities which insures loans to finance the construction, substantial rehabilitation, acquisition or refinancing of skilled nursing homes, assisted living facilities, and board and care homes. As of June 2022, FHA had active insurance on more than 3,700 mortgages on residential care facilities across the country with a total unpaid principal balance of $32.2 billion.


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Content Archived: January 2, 2024