With over 28,000 assisted living residences in the U.S catering to over 800,000 Americans, there is plenty of reason for investors to pay attention to the assisted living facility market. Advancements in healthcare and growing life expectancy have led to rising demand for assisted living communities.

Fortunately for investors, the U.S. Department of Housing and Urban Development provides insurance for loans to finance the acquisition, refinance, or construction of assisted living facilities.

For those looking to secure high-leverage, non-recourse financing for the acquisition, refinance, or construction of an assisted living facility, the HUD 232 and 232/223(f) loan programs may be worth considering.

HUD Financing for the Construction of Assisted Living Facilities

HUD 232 Loans

Section 232 of HUD's mortgage insurance programs provides insurance for mortgages for the construction or substantial rehabilitation of senior housing communities — including assisted living facilities, skilled nursing, and memory care. Section 232 loans generally have fixed-rate terms of up to 35 years and are fully amortizing. Loans start at $2 million and are available for facilities with as few as 20 residents.

HUD 232 Assisted Living Construction Loan Highlights

• Up to 90% leverage for profit-motivated sponsors (95% for non-profit)

• 1.11x DSCR for for-profit sponsors (1.05x for non-profit)

• Up to 40 years fixed and fully amortizing

• Assumable subject to HUD approval

• Competitive pricing

HUD Financing for the Refinance or Acquisition of Assisted Living Facilities

HUD 232/223(f) Loans

HUD Section 232/223(f) provides mortgage insurance for the refinance or acquisition of assisted living facilities and other senior housing and healthcare properties such as skilled nursing facilities. These long-term, fixed-rate loans start at $2,000,000 with leverage available up to 80% of the property value. 

HUD 232/223(f) Assisted Living Financing Highlights

• Up to 80% leverage for profit motivated sponsors (85% for non-profit)

• 1.45x minimum debt service coverage ratio

• Up to 35 years fixed and fully amortizing

• Assumable subject to HUD approval

• Competitive pricing

Looking to Finance an Assisted Living Facility?

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