HUD 232 Loan - New Construction or Rehabilitation of Healthcare Facilities

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Eligible Properties

Skilled Nursing (Skilled and Intermediate Care), Assisted Living, and Board & Care Facilities

Eligible Borrowers

Single-Asset, Special Purpose Entities (For-Profit or Non-Profit)

Loan Amount

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



Term & Amortization

Interest-only term equal to actual construction period, plus 40 years fully amortizing

General Loan Parameters

The maximum loan is the lesser of:

  • 80% Loan to Value for Skilled Nursing Facilities
  • 75% Loan to Value for Assisted Living/Board & Care Facilities
  • 1.45x Debt Service Coverage
  • 90% of Replacement Cost
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

0.77% at Closing
0.77% 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
  • Escrows required for repairs, mortgage insurance premium, taxes, insurance, and replacement reserves
  • Required third party reports include Market Study, Appraisal, Plans and Specs Review, and Phase I
  • Secondary financing is allowed, subject to HUD approval