Section 232 program · 232 NC/SR
232 NC/SR: new construction or substantial rehabilitation
A single loan that funds construction and then converts to a 40-year fixed-rate loan, for a new facility or a rehab whose hard costs exceed 25% of the as-completed value.
Who it fits
- A new licensed nursing home, assisted living facility or board and care home of at least 20 beds (2.2).
- A rehab counts as substantial when hard costs exceed 25% of the value after completion (Mortgagee Letter 2025-20, September 16, 2025; it was 15%).
- The developer and operator can show experience with the type of care proposed (chapter 8).
Loan limits
- Maximum loan to value
- New assisted living 75% for-profit, 80% nonprofit; skilled nursing 80% and 85% (3.2)
- Loan to cost
- 90% of total estimated replacement cost (3.4)
- Minimum debt service coverage
- 1.45, with mortgage insurance counted
- Term
- Up to 40 years or 3/4 of remaining economic life; at least 10 (2.6.D)
- Commercial space
- At most 10% of floor area and 15% of income (2.6.E)
Costs
- Mortgage insurance premium
- 0.77% upfront and 0.77% a year (assisted living with tax credits 0.45%)
- HUD application fee
- 0.30%
- HUD inspection fee
- 0.50% of the loan for new construction; 0.50% of improvement costs for rehab (2.6.I)
- Lender fee cap
- 3.5%
Reports to order
- Appraisal and market study
- Architectural and engineering review, cost review and geotechnical report (3.3.B)
- Phase I environmental site assessment
- Davis-Bacon prevailing wages apply
How long it takes
Firm commitment to closing, by fiscal year of closing, from HUD's endorsement database:
| Fiscal year | Loans | Median days | Middle half |
|---|---|---|---|
| 2016 | 14 | 196 | 103 to 253 |
| 2017 | 11 | 140 | 70 to 223 |
| 2018 | 8 | 216 | 142 to 361 |
| 2019 | 7 | 274 | 214 to 404 |
| 2020 | 6 | 162 | 113 to 308 |
| 2021 | 1 | 68 | n/a |
| 2022 | 2 | 124 | n/a |
| 2023 | 1 | 699 | n/a |
| 2025 | 1 | 358 | n/a |
| 2026 | 1 | 67 | n/a |
Endorsements of 232 NC/SR loans by fiscal year: 2016: 14, 2017: 11, 2018: 8, 2019: 7, 2020: 6, 2021: 1, 2022: 2, 2023: 1, 2025: 1, 2026: 1. Fiscal 2026 runs through the database's data run of July 8, 2026.
Watch for
- A working capital escrow of 4% of the loan, half of it a construction contingency, and an operating deficit escrow for lease-up.
The other Section 232 programs
Rules: HUD Handbook 4232.1 REV-1, Section II (effective January 19, 2017), section numbers in parentheses. Premiums: Federal Register, June 26, 2025 (90 FR 27330). Times and rates: HUD Office of Healthcare Programs records; see the methodology. Route 232 is not affiliated with HUD or FHA.