The purpose of the Group Home Program is to help individuals, qualified limited partnerships, and nonprofit organizations to construct or acquire or acquire and modify existing housing to serve as a group home or assisted living unit for eligible persons and households with special housing needs or to refinance mortgages on existing group homes. The Maryland Department of Housing and Community Development uses both state funds from the Group Home Financing Program and the proceeds from the sale of tax exempt mortgage revenue bonds under the Special Housing Opportunities Program to fund these loans. The Department will determine the most appropriate source of funds for the project based on eligibility requirements and underwriting of the project.
Federal Funds Notice
Federal Funds Notice must be completed by the borrower and executed by the seller prior to entering into a binding sales contract with the seller for ALL Group Home Program loan requests.
Eligible Types of Housing
Group Home Program loans may finance newly constructed buildings; acquisition or acquisition and rehabilitation of existing residential buildings; or refinance mortgages on existing group homes. Housing may include group sheltered living arrangements, senior assisted living homes, emergency or transitional housing facilities and other group homes which serve special needs groups.
Property must be in good repair and in compliance with applicable State and local housing and occupancy codes, or is able to be made so with the proceeds of loan or through other sources of funds. Appraisal submitted with application must be completed by an appraiser on the
approved appraisers list. Property must have a home inspection acceptable to the department and it cannot be more than 90 days old at the time of approval. All properties built prior to 1978 are required to have a lead paint risk assessment prepared by a certified and accredited lead paint testing company. If Special Housing Opportunities Program financing is being requested, property must be located in a Priority Funding Area unless, for existing construction, a waiver is granted on an exceptional basis.
Priority Funding Area maps are accessible on the Department of Planning’s website.
Individuals and nonprofit organizations, which provide group homes to eligible residents, may apply for Group Home Program loans. For Special Housing Opportunity Program funding, nonprofits must have a 501 (c) (3) IRS designation. All applicants must be licensed by the appropriate Maryland licensing authority.
Residents of the homes financed under these programs must be special needs groups, such as the developmentally or physically disabled, elderly, juveniles, or homeless. Sponsors must maintain 51 percent of all beds available for residents who have incomes which are 60 percent or less of area median income. Preference in financing is given to projects that house residents who have incomes below 30 percent of the area median income. Please refer to the
2015 Income and Rent Limits.
Loan terms are structured to help make the project financially viable and affordable for eligible residents. The interest rate varies from 0 to 7 percent depending on the source of the funds and the cash flow of the project. The maximum term is generally 30 years. State Group Home Financing Program loans are typically combined with Special Housing Opportunities Program loans. The
Maximum Loan Amounts vary by geographic location but may not exceed the appraised value of the property. Nonprofit sponsors are expected to contribute 5% towards the project. Individual sponsors are required to make a 10% equity contribution. Upon sale, exchange or disposition of the property financed with a Group Home Financing Program loan, the sponsor must share any net equity in the property with the Department at a rate determined by the Department.
Group Home Program loan funds may be used to refinance an existing group home mortgage or for all related costs development costs, such as acquisition, closing costs, appraisal and inspection fees and modification costs.
Eligible modifications include:
- Repair or replacement of major systems, such as heating, roofing, electrical or plumbing;
- Accessibility modifications such as ramps and grab bars;
- Lead paint abatement;
- General repairs and upgrades, such as painting and floor coverings;
- Minor improvements required to bring the property into compliance with state and local occupancy codes.
NOTE: Funds for refinancing are limited. Please contact the Department to determine if funds are available before submitting an application.
Local Government Involvement
Group homes must meet local government zoning codes.
CONTACT: Special Loans Program
Community Development Administration
Maryland Department of Housing and Community Development
7800 Harkins Road, Lanham, MD 20706
Toll free (Maryland only)
Maryland Relay for the Deaf at 711 in State or
1-800-735-2258 out of state.