Advertiser Disclosure

advertising disclaimer
Skip to main content
senior living retirement

How Can Real Estate Investors Use the HUD 232 Loan?

For investors interested in nursing home or senior facilities, HUD 232 loans could be an option.

[Updated: Feb 04, 2021] Nov 04, 2020 by Aly J. Yale
Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

If you’re interested in investing in nursing homes or senior care facilities, the Department of Housing and Urban Development’s 232 loan might be a good financing option.

The loan program was created to support the purchase, construction, rehabilitation, and refinancing of real estate aimed at aging Americans.

Are you thinking about a nursing home or assisted living facility investment? Here’s what you need to know about this loan product.

Details of the HUD 232 loan program

The HUD 232 loan program is administered by the department’s Office of Residential Care Facilities. Though the office doesn’t technically issue the loans, it does insure them, making it safer and more affordable for lenders to originate these loans for investors.

HUD 232 loans are designed for use only on nursing homes, assisted living facilities, intermediate care facilities, and board and care facilities. and can be used for the following purposes:

  • To purchase or refinance an existing facility.
  • To construct a new care facility.
  • To substantially rehabilitate an existing care facility.
  • To purchase or replace major movable equipment, install adult day care facilities, implement energy conservation measures, or add fire safety equipment to a facility.

The program offers financing up to 40 years on new and rehabilitated facilities and 35 years for existing ones without substantial rehabilitation.

Are you eligible for a HUD 232 loan?

There are a lot of requirements if you want to use a HUD 232 loan to finance your next healthcare investment. On the property side, your facility must accommodate at least 20 residents who need skilled nursing care or continuous care from licensed medical professionals. Your facility also must be licensed and regulated by the appropriate state agency.

You also must:

  • Put down anywhere from 5% to 25%, depending on the type of project and loan.
  • Be an investor, builder, developer, public entity, or private nonprofit corporation.
  • Pay the application fee and inspection fee, which vary based on loan type.
  • Pay for up-front mortgage insurance, as well as monthly mortgage insurance across the loan term.
  • Purchase professional liability insurance, fidelity bond insurance, property insurance, and hazard insurance.
  • Have at least three years of experience in operating a similar facility.
  • Submit a Fair Housing marketing plan, if it’s a new construction or rehabilitation project.

The lender will also need to conduct a site visit to inspect and appraise the property before you can be approved for the loan.

Benefits of HUD 232 loans

The biggest benefit of the 232 loan program is that it offers low interest rates -- typically lower than those seen on conventional loans or other investor-focused loan programs.

Loan terms are also long (between 35 and 40 years), allowing for more affordable monthly payments. This means more cash flow, too, which can help cover the costs of staffing and operating your facility.

Finally, HUD loans are non-recourse and secured by an asset. Though this does mean the lender can seize the facility if the loan isn't repaid, it protects investors from other financial losses should the property lose value.

Where to get a HUD 232 loan

As with any HUD loan, you’ll need to go through an approved HUD lender if you’re interested in using a 232 loan. The department offers an exhaustive list of these options here.

When you're ready to move forward with your application, make sure to connect with at least a few of these lenders. The interest rate and term can vary widely on any mortgage loan, and getting quotes from several can ensure you get the best possible deal on your loan.

According to its 2019 Annual Management Report, the Federal Housing Administration received 368 applications for the HUD 232 loan last year. Of those, a total of 314 investors were approved, totaling more than $4 billion in financing. That’s an approval rate of about 85%.

That’s down slightly from 2018, when 318 HUD 232 loans were issued (out of 391 applications total).

The bottom line

The HUD 232 loan can be a viable option if you’re considering a nursing home, senior living, or skilled nursing facility investment. If you’re unsure about eligibility or have other questions regarding the program, check out the ORCF’s FAQ page or reach out to the department at You might also consider one of the many HUD multifamily loans for your investment.

The "Unfair Advantages" of Real Estate Just Got a Whole Lot Better

Investing in real estate has always been one of the most effective paths to financial independence. That's because it offers incredible returns and even more incredible tax breaks.

These benefits weren't enough for Uncle Sam, though, as a new tax loophole now allows those prudent investors who act today to lock in decades of tax-free returns. We've put together a comprehensive tax guide that details how you can benefit from this once-in-a-generation investment opportunity. Simply click here to get your free copy.

Bank CD rates has a disclosure policy.