HUD 232 Program - Construction or Rehabilitation of Healthcare Facilities

Property Types

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

Eligible Borrowers

For profit and non-profit entities

Loan Amount

No Minimum/No Maximum



Term & Amortization

New Construction:
• Construction term, plus
• 40 year fully amortizing loan

• Rehabilitation term, plus
• 40 year fully amortizing loan

General Loan Terms

The maximum loan is the lesser of:

  • 75% Loan to Value for Assisted Living/Board & Care Facilities
  • 80% Loan to Value for Skilled Nursing 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
  • Third party reports include appraisal, market study, Plans and Specs review, and Phase I
  • Secondary financing is allowed, subject to HUD approval