HUD 242/223(f) Loan - Acquisition or Refinance of Hospitals

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Eligible Properties

Acute Care & Critical Access Hospitals (at least 50% of patient days must be acute care days)

Eligible Borrowers

For-Profit, Non-Profit, and Public Entities

Loan Amount

No Minimum/No Maximum (subject to General Loan Parameters)



Term & Amortization

Up to 25 years and fully amortizing

General Loan Parameters

Maximum loan cannot exceed 90% Loan to Value

Interest Rate

Fixed rate, subject to market conditions at the time of rate lock


None, except standard carve-outs


Yes, subject to HUD approval


Typically loans are prohibited from prepayment for the 1st year, then have a 9% penalty declining 1% each year thereafter until 0%.  Alternative lockout and prepayment structures are available.

Mortgage Insurance Premium

1% at Closing
0.65% Annually

Professional Liability Insurance

HUD requires a minimum coverage of $1 million per occurrence and $3 million aggregate.  Waivers may be granted in cases where premiums are high and claim history is clean.

  • Davis Bacon prevailing wages are required for new construction and substantial rehabilitation
  • Up to 20% of the mortgage amount may be used for capital improvements and equipment
  • Escrows required for repairs, mortgage insurance premium, taxes, insurance, and replacement reserves
  • Third party reports include appraisal, Market Need and Financial Feasibility study, PCNA, and Phase I