A HUD Section 232 new construction loan is an FHA-insured, non-recourse loan that funds the construction or substantial rehabilitation of a skilled nursing, assisted living or memory care facility and then becomes its permanent loan, with no refinance. It covers the construction period plus up to 40 years at a fixed rate, at up to 90% of cost and up to 80% of value for skilled nursing or 75% for assisted living.
Key terms at a glance
| Term | 232 new construction or substantial rehab | 232/223(f) acquisition or refinance |
|---|---|---|
| Use | Build or substantially rehab a facility | Buy or refinance an existing facility |
| Term | Construction period plus up to 40 years | Up to 35 years, fixed, fully amortizing |
| Max loan-to-value | 80% skilled nursing, 75% assisted living | 80% for-profit, 85% nonprofit |
| Max loan-to-cost | 90% | 85% acquisition for-profit (90% nonprofit) |
| Min debt service coverage | 1.45x | 1.45x |
| Mortgage insurance premium | 0.77% at closing and annually (0.45% for assisted living with LIHTC) | 1% at closing, then 0.65% a year |
| Commercial space limit | 10% of floor area and 15% of income | 20% of rentable area and 20% of income |
Who a 232 construction loan fits
- Operators and developers building skilled nursing, assisted living or memory care facilities where the market supports a new building
- Owners substantially rehabilitating an existing facility
- Sponsors who want one non-recourse, fixed-rate loan from groundbreaking through permanent financing
Main requirements
- An experienced operator: HUD reviews experience, licensure, staffing, financial capacity and survey history
- A market study showing demand for the beds or units
- Plans and cost review, and Davis-Bacon prevailing wages on construction
- State licensing and, where the state requires one, a Certificate of Need
- Third-party reports: appraisal, environmental report and plan and cost review
- 1.45x minimum debt service coverage at stabilization
Timeline
| Stage | What happens |
|---|---|
| Concept and pre-application | Lender screens the site, operator, market and budget |
| Reports and underwriting | Appraisal, market study, environmental report, plan and cost review |
| Firm application to firm commitment | HUD reviews the application, the operator and the construction plan |
| Initial endorsement | Construction loan closes and draws begin |
| Final endorsement | Construction is complete; the loan is permanent from then on |
Plan, cost and market study review make a construction loan longer than a 232/223(f) refinance. If the schedule can't wait, a bridge or construction loan from Bravo Property Trust can carry the project and a 232/223(f) refinance can follow at stabilization.
Bravo in Section 232
Bravo Capital is a HUD LEAN-approved lender for Section 232. Since January 2024 it has received seven Section 232/223(f) firm commitments totaling $146.4 million, and all seven have closed, including Blue Ridge Therapy Connection in Stuart, Virginia ($41.7 million, March 2026) and Wyndhurst Health and Rehabilitation in Lynchburg, Virginia ($34.2 million, July 2026). Those are refinances;
Talk to an underwriter See the Section 232 guide
Questions borrowers ask
What is a HUD Section 232 new construction loan?
A HUD Section 232 new construction loan is an FHA-insured, non-recourse loan that funds the construction or substantial rehabilitation of a skilled nursing, assisted living or memory care facility and then becomes its permanent loan, for the construction period plus up to 40 years at a fixed rate.
How much can I borrow with a HUD 232 new construction loan?
Up to 90% of cost, and up to 80% of value for skilled nursing or 75% for assisted living, with minimum debt service coverage of 1.45x.
What is the mortgage insurance premium on a HUD 232 new construction loan?
0.77% at closing and annually, or 0.45% for assisted living with low-income housing tax credits, under HUD's notice at 90 FR 27330 (June 26, 2025).
Do I need a new loan when construction ends?
No. A Section 232 new construction loan converts to permanent financing at final endorsement, so there is no separate takeout refinance.
About the author
Aaron Krawitz is the founder and CEO of Bravo Capital, a HUD-approved MAP and LEAN lender in New York City. He founded Bravo in 2021 after serving as president of Dwight Capital. Bravo and its affiliate, Bravo Property Trust, have closed more than $2.5 billion in financing, and Bravo closed every HUD firm commitment it received in 2025.
