HUD vs Fannie Mae vs Freddie Mac for assisted living loans
For a stabilized assisted living building, HUD’s 232/223(f) allows the highest loan to value, 80%, and the longest fixed term, 35 years. Fannie Mae and Freddie Mac cap assisted living at 75% of value and 1.40 coverage, with terms of 5 to 30 years, but close faster and are not limited to the payoff the way a HUD refinance is. Which one sizes larger depends on the payoff, since a HUD refinance cannot exceed it, and on coverage, since HUD’s 1.45 with the premium counted is the tighter test.
The terms side by side
| HUD 232/223(f) | Fannie Mae Seniors Housing | Freddie Mac Seniors Housing | |
|---|---|---|---|
| Max loan to value | 80% (85% qualifying nonprofit) | 75% | 75% (7+ year term), 70% (5 to under 7) |
| Min coverage, mostly assisted living | 1.45, MIP counted | 1.40 | 1.40 |
| Min coverage, mostly independent living | not eligible above 25% independent living | 1.30 | 1.30 |
| Stand-alone memory care | as licensed assisted living | not on the term sheet | 65% / 1.60 |
| Skilled nursing | its own 232 facility type | at most 20% of net cash flow | at most 20% of NOI |
| Term | up to 35 years, fully amortizing | 5 to 30 years | 5 to 10 years, up to 30 fixed |
Sources: HUD Handbook 4232.1 REV-1; Fannie Mae Seniors Housing Financing Term Sheet and Multifamily Guide Part III, chapter 5 (effective September 28, 2026); Freddie Mac Seniors Housing Loan term sheet dated April 2026.
One building, three answers
A 90-unit building, mostly assisted living, owned by a for-profit borrower. Underwritten NOI is $1,800,000, the appraisal is $24,000,000, and the owner owes $14,000,000 with $500,000 of closing costs and repairs to finance. Assume 6.00% for HUD over 35 years and 6.25% for the agencies over 30. Those rates are for the arithmetic, not quotes.
For HUD 232/223(f), value allows $19.2 million. Coverage at 1.45 with the 0.65% premium allows about $16.6 million. The payoff test, with HUD’s 0.30% fee, the 1.00% upfront premium and a 2% lender fee financed, comes to about $15.0 million. The payoff test binds: the loan is about $15.0 million, and no cash comes out.
For Fannie Mae, value at 75% allows $18.0 million. Coverage at 1.40 allows about $17.4 million, which binds.
Freddie Mac, on a term over seven years, applies the same 75% and 1.40, so it also lands at about $17.4 million.
The agencies size $2.4 million higher here because HUD’s refinance is capped at what it pays off. Whether an agency lender will let proceeds above the payoff go to the borrower is a question for that lender’s credit team; the term sheets do not address it. Cut the existing debt to $17 million and HUD’s loan rises to the coverage limit, about $16.6 million, still under the agencies, because 1.45 coverage with mortgage insurance is tighter than 1.40 without it.
HUD’s payment is lower before insurance: the same $15 million costs about $1,026,000 a year in principal and interest over 35 years at 6.00%, against about $1,108,000 over 30 years at 6.25%. Add HUD’s $97,500 premium and HUD runs about $1,123,500 a year, slightly above the agency loan, though fixed for 35 years.
Other differences that decide it
- Closing time: HUD’s fiscal 2025 closings took a median of about 235 days from firm application to closing. Agency loans are not tracked in a public file.
- A HUD loan needs three years since completion, so a new building waits or takes a bridge loan first.
- An agency loan matures in 5 to 30 years and faces a refinance at maturity; a HUD loan amortizes fully.
- Fannie Mae underwrites a minimum management fee of 5% to 10% of gross potential rent depending on the property, which can lower the NOI it sizes on.
Questions people ask
Which lends more on assisted living, HUD or the agencies?
On value, HUD goes higher, to 80% of an existing assisted living building against 75% at Fannie Mae and Freddie Mac. On a refinance HUD's 223(f) is also capped at the payoff plus costs and cannot return cash, so a building with low existing debt often sizes larger with an agency loan.
What coverage do Fannie Mae and Freddie Mac require on assisted living?
1.40 times when more than half the units are assisted living or memory care, and 1.30 when more than half are independent living. Freddie Mac's stand-alone memory care grid requires 1.60.