HUD 232 loans for assisted living and memory care

HUD’s Section 232 program insures long-term, fixed-rate, fully amortizing loans on licensed assisted living facilities with at least 20 beds, including those with memory care units. On an existing building, a 232/223(f) loan can reach 80% of value (85% for a qualifying nonprofit) at a minimum 1.45 times debt service coverage, over as long as 35 years. As of September 30, 2026, HUD’s active-loan file shows 1,044 FHA-insured assisted living loans with about $8.4 billion outstanding.

What the building has to be

HUD Handbook 4232.1 (REV-1, section II, 2.2.B) defines an eligible assisted living facility as a project of at least 20 beds designed for frail elderly people, meaning people 62 or older who cannot perform at least three activities of daily living. It must be licensed or regulated by the state or a local government, provide 24-hour protective oversight and three meals a day, and have at least one full bathroom for every four residents.

Four rules cause most of the trouble:

• Independent living units can make up no more than 25% of a 232 project’s beds. Those units do not need a license. A campus with more independent living than that can split it into a 232 loan and a separate multifamily loan.
• Licensed beds must be at least equal to the beds HUD underwrites, and the licenses are pledged as security for the loan.
• Commercial space on a 223(f) is capped at 20% of floor area and 20% of income.
• A 223(f) refinance or purchase needs the building to have been completed or substantially rehabbed at least three years before the firm commitment application.

Memory care

Memory care is not a separate facility type in Section 232. HUD finances it as units within a licensed assisted living facility or nursing home. Since a January 6, 2026 notice to lenders, HUD’s loan documents define a project’s approved use by the four statutory types only; HUD’s own example is a licensed assisted living facility of 100 units, 20 of them memory care, which needs no separate memory care designation in the documents. The handbook still expects the operator to have experience with the type of care proposed, and lists memory care by name.

How much and at what cost

	232/223(f) refinance or purchase	232 new construction
Max loan to value, for-profit	80%	75%
Max loan to value, nonprofit	85%	80%
Min debt service coverage	1.45	1.45
Max term	35 years	40 years
Upfront / annual MIP	1.00% / 0.65%	0.77% / 0.77%
HUD application fee	0.30%	0.30%

LTV, coverage and terms are from Handbook 4232.1 (chapters 2 and 3, effective January 19, 2017). The premiums are from the Federal Register notice of June 26, 2025, which left HUD’s healthcare rates unchanged and ended the lower green rate for applications received on or after August 25, 2025. New assisted living construction with low-income housing tax credits pays 0.45% upfront and 0.45% a year.

What HUD’s files show

HUD’s endorsement database lists 2,336 FHA-insured assisted living loans since fiscal 2001, for about $19.3 billion of original principal. Of the 1,044 active today, the median note rate is 3.50%, and 206 carry 5% or more. Illinois, California, Ohio, Wisconsin and Minnesota have the most active loans. Each state page lists that state’s active HUD assisted living loans with rate, balance and maturity.

Is it the right loan

HUD’s 35-year fixed rate and higher loan to value come with more process than an agency loan: a third-party report package, HUD’s own review queue, and no cash out on a 223(f). Fannie Mae and Freddie Mac lend up to 75% on assisted living at 1.40 coverage with shorter terms. Compare all three on your numbers.