HUD 232 Loans

New Construction or Substantial Rehabilitation Loans for Senior Living Properties  

If you're interested in building, purchasing, or substantially rehabilitating a senior housing development, an assisted living facility, or a skilled nursing center, a HUD 232 loan could be one of the most affordable ways to do it. HUD 232 loans are specifically designed for senior living properties with 20 or more patients. And, just like HUD 223(f) and HUD 221(d)(4) loans, are assumable with FHA/HUD approval, HUD 232 loans are non-recourse, and have particularly lenient leverage requirements. In addition, HUD 232 loan rates are fixed, meaning that borrowers won't have to worry about their payments increasing over time. On top of that, HUD now uses HUD 232 LEAN processing, a streamlined and shortened loan approval process for Section 232 borrowers. 

At Commercial Real Estate Loans, Inc., we understand that the amount of senior citizens in the United States is rapidly expanding-- and we're committed to supporting developers who want to build or repair the housing seniors need. We also appreciate that HUD multifamily loans are some of the most cost-effective construction loans in the industry. That’s why we're ready to guide you through every part of the HUD 232 application, approval, and closing process.  

HUD 232 Loan Terms 

HUD 232 loans have terms including: 

  • Loan Size: $2 million ($7.6 million average loan size)

  • Loan Term: 40 years

  • Leverage:

    • New Construction:

      • Skilled Nursing:/Independent Living:

        • For profit: 75% LTV

        • Non-profit: 80% LTV

      • Assisted Living:

        • For profit: 75% LTV

        • Non-profit: 80% LTV

    • Purchase:

      • For profit: 75% LTV

      • Non-profit: 80% LTV

    • Substantial Rehabilitation*:

      • For profit: 75% LTV

      • Non-profit: 80% LTV

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

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

  • DSCR: 1.45x minimum DSCR

*For substantial rehabilitation, the hard cost of the rehabilitation needs to be more than 15% of the project's post-rehab value, or, alternatively, two or more major building systems (i.e. plumbing or roofing) must be replaced.  

What Properties are Eligible for HUD 232 Loans? 

While HUD 232 loans are designed solely for healthcare properties, not every healthcare property is eligible for a HUD 232 loan. In particular, projects financed with these loans:

  • Must be designed for individuals who need long-term care or attention

  • Cannot have more than 25% of the units designated as independent living units

  • Need to be licensed by the appropriate city or state authority

  • Cannot have commercial space exceeding: "10% of the gross floor area of the project and 15% of the gross project income."

HUD 232 Loans vs. HUD 232/223(f) Loans

HUD 232 loans are the best option for developers who want to build or substantially rehabilitate a healthcare facility. However, they don't quite work for as-is purchases or refinances of healthcare properties. That's why HUD has another, similar program, the HUD 232/223(f) loan, which is specifically intended for that purpose. Just like HUD 232 loans, HUD 232/223(f) loans are non-recoursefixed-rate, fully assumable (with FHA approval), and have similar terms to HUD 232 loans. 



  • HUD 232 loans offer fixed interest rates

  • Loans are fully assumable with FHA approval

  • HUD 232 loans are non-recourse, which restricts liability for developers/investors




  • Mortgage insurance premiums (MIPs) are still required

  • An FHA application fee of 0.30% of the entire loan amount is required

  • An FHA inspection fee of 0.50% of the loan amount is also required (though this can be funded with the loan balance)

  • Like other HUD multifamily loans, the HUD 232 loan requires that a developer make regular payments into a replacement reserve fund

Commercial Real Estate Loans, Inc. is the partner you need to help acquire or refinance your next multifamily or commercial real estate project. Whether you're a small startup or an established company, we have the knowledge and experience to give you more financing options.