Important: Refinance your current loan to avoid a balloon payment prior to maturity date.  - Read more.

HUD 232 Program Benefits for Senior Housing Owners and Operators


HUD 232 Program Benefits for Senior Housing Owners and Operators

In the past, seasoning requirements for HUD required a minimum of two years before interim or bridge loans could be paid off utilizing HUD/FHA financing. If a bridge loan is taken out through an FHA/HUD approved lender to take out equity, the FHA/HUD loan can be processed along with the Bridge loan to close shortly after to pay off the Bridge loan and secure long-term low rate financing. Lenders like to keep the loan-to-value of Bridge Loans between 60% and 65%to ensure that that there are no issues with value when securing the FHA/HUD financing loan. Most applications for HUD/FHA loans that are under 70% do not require two years seasoning. A table below is provided with the guidelines of the maximum for loan-to value and seasoning requirements for existing debt.

Guidelines for Loan-To-Value
and Percentage of Existing Debt

% of Existing Debt Used for Project Purposes

Requested FHA Loan Amount Less than 60% LTV

Requested FHA Loan Amount 60% - 70% LTV

Requested FHA Loan Amount Greater than 70% LTV

Greater than 50%

Application may be submitted within 2 years

Application may be submitted within 2 years

2 year seasoning applies

Less than or equal to 50%

Application may be submitted within 2 years

2 year seasoning applies

2 year seasoning applies


Prior to the change in guidelines, there were many owners that were not able to access equity, unless they wanted to wait three years to obtain HUD/FHA financing. This resulted in a lower NOI and higher interest rates during that time. Also, in many cases losing out on a very favorable low interest long term interest rate that increased over that time frame.

Another change favorable to project owners is that license operator debt is now eligible if the funds are used for certain facility related purposes. These purposes include:

  • Any working capital related to lease up and project stabilization
  • Purchase of fixtures, furniture and equipment
  • Other approved capital expenditures

*Any costs associated with Accounts Receivable lines of credit are not eligible


HUD provides commercial loans for assisted living, skilled nursing, intermediate care, memory care and other residential care facilities through Section 232. FHA insured mortgages are available for the purchase or refinancing of residential care facilities with a stabilized operating history.

Program guidelines and benefits are below:

  • Up to 80% leverage
  • Up to 100% of transaction costs for refinance
  • Non-recourse and assumable
  • Up to 35-year fixed rate term
  • Property types include assisted living, memory care, skilled nursing, intermediate care


HUD/FHA Section 232 financing provides commercial mortgages for assisted living facilities, skilled nursing, skilled nursing and intermediate and memory care properties meeting the following requirements:

  • Must provide continuous care.
  • Must offer three meals per day.
  • Facility must be licensed by appropriate government entity.
  • May include up to 25% non-licensed independent living units.
  • 20 bed minimum.
  • Operating leases to qualified facility operators are permissible, subject to HUD approval.
  • The facility must have been completed or substantially rehabilitated for at least three years prior to the date of the application. Projects with additions completed less than three years previous are eligible as long as the addition was not larger than the original project size and number of beds.

newsletter signup