The quick read: Yes. HUD's Section 232/223(f) program insures refinance loans on existing assisted living facilities that are licensed or regulated by the state, have at least 20 beds, and were completed or substantially rehabilitated at least three years before the application. HUD's current chart for a for-profit borrower refinancing a facility that is not already FHA-insured shows a 35-year term, 80 percent maximum loan-to-value and a 1.45 minimum debt service coverage ratio. The trade-off is that the refinance cannot put cash in the owner's pocket, and the file takes longer than a bank renewal.
As of: October 6, 2026 (HUD Office of Healthcare Programs chart, Handbook 4232.1 Section II Chapter 2, and the June 26, 2025 Federal Register premium notice, read this date)
Maximum loan-to-value: 80% for-profit, 85% non-profit
Minimum debt service coverage: 1.45
Maximum term: 35 years or 75% of remaining economic life, whichever is less
Cash-out: none; borrowers and operators may not receive cash proceeds
Mortgage insurance premium: 100 basis points upfront, 65 basis points annual (without LIHTC)
Recourse: non-recourse note, with carve-outs for bad acts
Can you refinance an assisted living facility with a HUD 232 loan?
Yes, HUD's Section 232 program insures refinance loans on licensed assisted living facilities through its 223(f) purchase and refinance option, provided the facility has at least 20 beds, has been complete for at least three years, and needs only moderate repairs rather than a substantial rehabilitation. The loan is fixed-rate, fully amortizing and non-recourse.
HUD's Office of Healthcare Programs describes Section 232 as "an FHA loan product that provides mortgage insurance for residential care facilities" and says it "may be used to finance the purchase, refinance, new construction, or substantial rehabilitation of a project." HUD does not lend; an FHA-approved lender originates the loan and HUD insures it. This article covers the refinance of a stabilized facility. For the program family as a whole, see HUD and FHA loans, and for the multifamily equivalent of the same refinance, see 221(d)(4) vs. 223(f).
Which assisted living facilities qualify for a HUD 223(f) refinance?
An assisted living facility qualifies for a HUD 232/223(f) refinance when it has at least 20 beds designed for frail elderly residents, holds a state license or is state-regulated, was completed or substantially rehabilitated at least three years before the Firm Commitment application, and needs repairs below the substantial-rehabilitation threshold.
Handbook 4232.1, Section II, Chapter 2 sets out the tests a lender checks first:
Facility size: at least 20 beds, designed for frail elderly residents
Licensing: licensed or regulated by the state, municipality or other political subdivision
Age: completed or substantially rehabilitated for at least three years before the Firm Commitment application
Condition: repairs cannot rise to substantial rehabilitation, and all critical repairs must be finished before HUD closes the loan
History: projects whose borrower, operator or affiliates filed for or emerged from bankruptcy within the last 5 years are ineligible
Structure: the facility must be the borrower's only asset, and the loan must be a first lien
The handbook also requires the facility to provide continuous protective oversight, three meals a day and at least one full bathroom for every four residents. Licenses are pledged as security for the loan, so any change in bed count needs HUD approval. Where an operating lease covers three or more facilities or totals $15 million, HUD requires a master lease.
Occupancy and operating history are tested through the numbers rather than a single printed threshold: the facility has to show net operating income that covers the new debt at HUD's ratio, and the handbook lets HUD require a debt service reserve in 223(f) applications where the project has not demonstrated the underwritten income for an appropriate period.
How much can a HUD 232/223(f) refinance lend on an assisted living facility?
A HUD 232/223(f) refinance on an assisted living facility not already FHA-insured can lend up to 80 percent of value for a for-profit borrower or 85 percent for a non-profit, sized so net operating income covers debt service at least 1.45 times, over a term of up to 35 years.
Handbook 4232.1 sizes a 223(f) refinance at the lowest of several tests, chiefly the value test, the coverage test and the cost to refinance (eligible existing debt plus repairs, reserves and closing costs), and in practice the coverage test often binds. Hypothetical illustration, not a quote: a facility appraised at $20 million with $1.5 million of underwritten net operating income. The 80 percent value test allows $16 million. The 1.45 coverage test caps annual debt service, including the mortgage insurance premium, at about $1.03 million; at a fixed 35-year payment, that may support less than $16 million depending on the rate. The smallest figure, including the cost to refinance, is the loan.
The handbook calls the LTV and coverage figures underwriting benchmarks: a submission above the LTV or below the coverage benchmark needs substantial justification and mitigation. HUD's term rule is 35 years or 75 percent of the remaining economic life, whichever is less, and not less than 10 years. A facility already insured by FHA follows a different chart: no printed LTV cap, a 1.11 coverage ratio for for-profit borrowers and 1.05 for non-profits, through 223(f) or a 223(a)(7) refinance of the existing FHA-insured loan.
Can you take cash out with a HUD 232 refinance?
No, you cannot take cash out with a HUD 232/223(f) refinance, because Handbook 4232.1 states that borrowers and operators may not receive any cash proceeds from it; the program exists to refinance at lower rates, reduce debt service and fund needed repairs, not to return equity to the owner.
That is the largest structural difference from a conventional cash-out refinance. Proceeds can retire the existing debt, pay closing costs, fund required repairs and reserves, and that is the end of it. An owner who needs to pull equity out of a stabilized assisted living facility has to look outside the program, for example at an agency or bank refinance, confirm that lender's cash-out terms, and weigh that cash against the cost of giving up HUD's 35-year fixed rate.
What does a HUD 232 refinance cost?
A HUD 232/223(f) refinance costs a 30-basis-point application fee, an inspection fee, a lender financing fee capped at 3.5 percent of the loan, and FHA mortgage insurance of 100 basis points upfront plus 65 basis points a year on a facility without low-income housing tax credits.
| HUD 232/223(f) cost item | Figure | Source |
|---|---|---|
| Application fee | $3 per $1,000 (30 basis points) of the requested loan | Handbook 4232.1, II-2, 2.5.W |
| Inspection fee | $30 per bed if repairs are $3,000 per bed or less; otherwise 1% of repair costs | Handbook 4232.1, II-2, 2.9.G |
| Lender financing fee | Up to 3.5% of the loan amount; up to 5.5% in bond transactions | Handbook 4232.1, II-2, 2.9.H |
| Upfront MIP, without LIHTC | 100 basis points | Federal Register, June 26, 2025 |
| Annual MIP, without LIHTC | 65 basis points | Federal Register, June 26, 2025 |
| Annual MIP, with LIHTC | 45 basis points | Federal Register, June 26, 2025 |
The June 2025 notice also eliminated the reduced green and energy-efficient premium category for applications received on or after August 25, 2025. Add third-party reports, legal fees, reserves for replacement and any prepayment premium on the existing loan; the existing lender's prepayment terms can decide whether a refinance pays.
How does HUD 232 compare with agency and bank refinances?
HUD 232/223(f) offers the longest fixed term and non-recourse structure but no cash-out, while a Freddie Mac seniors housing loan offers up to 75 percent leverage on shorter terms and a bank portfolio loan turns on one credit approval, sized to bank policy and an 85 percent supervisory loan-to-value limit that banks may exceed for a capped share of loans.
| Refinance route for a stabilized assisted living facility | Maximum leverage | Minimum coverage | Term | Cash-out | Main timeline driver |
|---|---|---|---|---|---|
| HUD 232/223(f), not FHA-insured | 80% for-profit; 85% non-profit | 1.45 | Up to 35 years, fully amortizing, fixed | None permitted | HUD review, third-party reports, critical repairs |
| HUD 223(f) or 223(a)(7), already FHA-insured | No printed LTV cap | 1.11 for-profit; 1.05 non-profit | Remaining term; HUD may extend up to 12 years | None permitted | HUD review of the existing FHA-insured loan |
| Freddie Mac Seniors Housing, assisted living over 50% of units | 75% amortizing or partial interest-only for 7-year and longer terms; 70% for 5 to under 7 years | 1.40x amortizing | 5 to 10 years; up to 30 for fixed-rate | Not addressed on the term sheet | Lender and Freddie Mac underwriting |
| Bank portfolio loan | Bank policy; 85% supervisory LTV limit for improved property, which a bank may exceed for a limited share of loans | Bank policy | Bank policy, often shorter with a balloon | Bank policy | One institution's credit approval |
Dated: HUD figures from the Office of Healthcare Programs chart and Handbook 4232.1, read October 6, 2026; Freddie Mac figures from its Optigo Seniors Housing Loan term sheet dated 4/26; the bank limit from the appendix to 12 CFR part 34, subpart D, 2025 edition. Bank rows describe the mechanism, not a quoted term.
The mechanism behind the numbers is the same everywhere: care facilities are valued on operating income, so the coverage ratio usually sets the loan. HUD trades a slower, more document-heavy process for the longest fixed amortization, which lowers the annual payment and lets the same income carry more debt. Freddie Mac also permits a limited amount of skilled nursing, up to 20 percent of net operating income.
What should you do with a maturing bank loan while HUD processes?
While a HUD 232/223(f) refinance is in process, the usual move is to negotiate a short extension with the current bank or line up a short-term loan that HUD can take out, because the three-year rule, third-party reports and HUD review all have to finish before the existing balloon falls due.
Start with the calendar. Confirm the three-year date from the certificate of occupancy or rehabilitation completion, order the appraisal and the property condition assessment early, and finish critical repairs before closing. Ask the bank for an extension that matches the HUD timeline rather than a one-year renewal that resets the clock. If the facility is still below the income HUD will underwrite, HUD may require a debt service reserve or the deal may need to wait. The full senior-housing picture is on our senior housing loans page.
Refinancing a stabilized care facility? What HUD and other lenders will test
Refinancing a stabilized care facility starts with one complete package that answers what every lender type tests: the state license and bed count, trailing twelve-month operating statements, occupancy and payer mix, the operator lease, the facility's age and condition, and the existing loan's maturity and prepayment terms.
Add the rent roll by unit type, staffing costs, the most recent state survey, the current note and payoff letter, and a capital needs list. With that file, HUD, agency and bank lender types can each size the deal on the same numbers, and the comparison is about term, leverage, cash-out and timing rather than paperwork.
YieldStack is a commercial mortgage brokerage, not a lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed. Submit your assisted living refinance and the deal team will route it to the HUD, agency and bank lender types whose current programs fit the facility.
The bottom line
Yes, you can refinance an assisted living facility with a HUD 232/223(f) loan if it is licensed, has at least 20 beds, has been complete for three years and needs only moderate repairs. HUD's chart allows 80 percent leverage for a for-profit borrower at a 1.45 coverage ratio over up to 35 years, fixed and non-recourse, but no cash-out. If you need equity out or a faster close, compare an agency or bank refinance, and start early enough that the bank balloon does not force the decision.