Bridge-to-HUD financing for assisted living, step by step
A bridge-to-HUD plan uses a short-term loan, usually interest only, to buy or stabilize an assisted living building, then refinances it into a 35-year HUD 232/223(f) loan once the building qualifies. The plan exists because of HUD’s timing rules: a 223(f) needs at least three years since the building was completed or substantially rehabbed, prices off the building’s stabilized cash flow, and takes the better part of a year to close.
The HUD rules that set the clock
From HUD Handbook 4232.1 REV-1:
- The building needs three years since completion: “The project must have been completed or substantially rehabilitated for at least three years prior to the date of the Firm Commitment application” (section II, 2.9.A). A building opened two years ago has to wait.
- A building you already own is refinanced, not purchased: “Any property acquired before the date of the mortgage insurance application will be treated as a refinance transaction.” Bought on a bridge loan, the building is refinanced by HUD, and the loan is limited to the payoff plus eligible costs, with no cash out.
- Debt that does not meet HUD’s eligible-debt rules needs two years of seasoning to be refinanced at full value (section 3.13.D).
- HUD lends up to 80% of value for a for-profit owner of an existing assisted living building, 85% for a qualifying nonprofit, at 1.45 coverage with mortgage insurance counted.
How long HUD takes
HUD publishes each fiscal year’s closings with the dates of every step. In the fiscal 2025 file, 170 Section 232/223(f) closings record the date HUD received the firm application; all 329 record the firm commitment and closing dates. The medians:
| Step | Median days |
|---|---|
| Firm application received to firm commitment (170 loans) | 146 |
| Firm commitment to initial endorsement, closing (329 loans) | 101 |
| Application received to closing (170 loans) | 235 |
Add the weeks before that to order the appraisal, market study, property condition report and Phase I environmental report. Size the bridge term to cover the wait for the three-year mark plus HUD’s processing, with room for a slow queue; HUD sets no bridge term, so it is a negotiation with the bridge lender.
What the bridge lender looks at
Bridge loans have no published terms like HUD’s or the agencies’. The lender sizes against today’s value and today’s NOI, often interest only, and will want to see the path to the permanent loan: when the three-year mark falls, what NOI the building needs to reach for HUD’s 1.45 coverage at the payoff amount, and whether the operator has the history HUD will review.
Say the bridge payoff will be $14 million plus $500,000 of costs, HUD’s cost test caps the 223(f) at about $15 million once its fees are financed. To clear 1.45 coverage on that loan at 6% over 35 years, with the 0.65% mortgage insurance premium, the building needs about $1.63 million of NOI. Run your own in the loan sizer.
When HUD is the wrong exit
If the building needs cash out, a term shorter than 35 years, or a close inside a few months, an agency loan from Fannie Mae or Freddie Mac may be the better permanent loan. Both lend up to 75% on stabilized assisted living at 1.40 coverage.
Questions people ask
Why do assisted living buyers use a bridge loan before HUD?
A 232/223(f) loan needs the building to have been completed or substantially rehabbed at least three years earlier, prices off stabilized operations, and takes months to close. A bridge loan funds the purchase or lease-up now, and the HUD loan refinances it once the building and its numbers qualify.
How long does a HUD 223(f) take to close?
In HUD's fiscal 2025 closings file, the median 232/223(f) refinance or purchase closed about 235 days after HUD received the firm application, with a median 146 days to the firm commitment. Across all 329 223(f) closings that year, the median from firm commitment to closing was 101 days.