HUD 232 Healthcare Financing

HUD 232 Loans for Building or Substantially Rehabilitating Senior Living and Healthcare Facilities

Right now, the market for senior housing is red hot-- and with 10,000 Americans turning 65 each day, it looks the market will only be getting hotter in the foreseeable future. If you're a developer looking to expand your presence in the senior housing or healthcare market, a HUD 232 loan could be the perfect option. HUD 232 loans allow for the new construction or substantial rehabilitation of senior housing, assisted living, and skilled nursing facilities with 20 or more residents. And just like other HUD multifamily loans, HUD 232 loans are fully assumable (with FHA approval and a 0.05% fee), and are non-recourse. Plus, HUD 232 loans now use HUD 232 LEAN loan processing, a streamlined form of processing which reduces approval times and reduces the need for duplicate paperwork. 

Sample Terms For HUD 232 Loans

Size:  Minimum loan of $2 million (typical loan averages $7.6 million) 


  • New Construction: 75% (for profit), 80% (non-profit) 

  • Substantial Rennovation: 

    • 75% (for profit), 80% (non-profit), OR

    • Borrower-owned: 100% of current mortgage debt or 90% pre-rehabilitation market value (95% for non-profits)

    • Purchase/substantial rehabilitation: 85% of purchase price or 90% pre-rehabilitation market value (95% for non-profits)

Term:  40 years, fixed-rate 

Amortization:  Up to 40 years, fully amortizing

Minimum DSCR:  1.45x

MIP:   Mortgage insurance premiums for HUD 232 loans include a one-time MIP fee of 1% of the entire loan amount, due at closing, and an annual MIP fee of 0.65% 

Third-Party Reports: 

HUD 232 loans typically require third-party reports, including: 

  • HUD/FHA Approved Full Property Appraisal

  • Borrower/Stakeholder Credit Reports

  • Plans and Specifications Review

  • Phase I Environmental Assessment

  • Architectural/Engineering Report

  • Market Study

HUD 232 Eligible Properties: 

In order to be eligible for HUD 232 financing, a project must: 

  • House 20 or more long-term patients 

  • Provide constant/ongoing medical attention for individuals in need of care 

  • Be licensed by the appropriate city or state organization 

  • Have had construction be complete for at least three years, though newer property additions are allowed, as long as they are smaller than the original building (for HUD 232 substantial rehabilitation loans) 

  • Have no more than 20% of the project's gross area or gross income devoted to/derived from non-resident day care 

  • Have no more than 25% of all units can be independent living units 

  • Have no more than 10% of the gross floor space filled and no more than 15% of the property's income derived from commercial tenants  

Davis-Bacon Wages:  Since HUD 232 projects involve federal insurance and construction over $2000, they are subject to the Davis-Bacon act, which requires that all workers be paid the "prevailing wage" in their area. In order to determine the prevailing wage in your area, you can use this free Davis-Bacon wage calculator, provided by 


  • Low, fixed interest rates

  • Loans are fully assumable (with FHA/HUD approval)

  • HUD 232 loans are non-recourse, limiting risks for developers


  • Requires that borrower/owner makes regular contributions to a replacement reserve fund

  • An FHA application fee of 0.30% of the loan amount and an FHA inspection fee of 0.50% of the loan amount are both required

  • Requires both an initial, one-time MIP (mortgage insurance premium) at closing, as well as monthly MIPs througout the life of the loan

  • Requires annual audited financial statements from owners