Senior living
HUD 232 or a bridge loan first? Choosing between permanent and interim debt
HUD 232 is the lowest-cost permanent debt for a care facility, but it needs a stabilized operating history. When a facility is newly built, recently acquired or still filling, a bridge loan covers the gap, sized to be repaid by a 232 refinance once the property qualifies.
By Neeli Khanna, designated officer and broker. Published . 3 minute read.
Key takeaways
- HUD 232 refinances in Corin's assumptions size at up to 80% loan-to-value and 1.45x coverage over 35 years.
- HUD generally looks for at least 3 years since completion and 85% stabilized occupancy on a refinance.
- A senior-housing bridge in the sizer allows up to 75% loan-to-value on a 36-month term, with a 8% minimum debt yield.
- The deciding question is whether the bridge exit, a 232 refinance, will clear HUD's tests when the bridge matures.
Why HUD 232 is hard to reach on day one
HUD 232 is attractive because it is long-term, fully amortizing and non-recourse apart from standard carve-outs. The cost of that is a demanding file. On a refinance or purchase, Corin's assumptions assume a facility at least 3 years past completion, operating near 85% occupancy, with enough income to carry a 1.45x coverage ratio. Facilities below roughly 25 beds often find HUD's fixed costs outweigh its rate advantage.
A new operator, a licensing change, a lease-up or a deferred-maintenance backlog can each push a facility out of the 232 box for now, even when the long-term plan is a 232 refinance.
What a bridge loan has to prove
A bridge lender underwrites the exit as much as the property. In the sizer, a senior-housing bridge goes up to 75% loan-to-value, requires a debt yield of at least 8%, and runs 36 months, priced over SOFR. The bridge is only sensible if the facility can plausibly reach the 232 tests inside that term.
The exit test models the refinance: at the stabilized income you expect, does a 232 loan large enough to repay the bridge clear HUD's loan-to-value and coverage limits? If it does not, the bridge becomes a long-term problem rather than a short one.
- Stabilized income the facility can realistically reach, not the pro forma
- A 232 loan amount that repays the bridge, with room for costs and reserves
- Licensing and operator status in good standing
- A timeline with margin: HUD processing times vary and are not guaranteed
When to skip the bridge
If the facility already meets the 232 tests today, a bridge adds a second set of closing costs for no benefit. Compare the all-in cost of going straight to 232 against bridge plus 232: the bridge costs more per year, and the sponsor pays closing costs twice.
If the facility is far from stabilizing, a bridge sized on the assumption of a 232 exit may be the wrong tool. Other structures, such as a bank or debt fund loan with a longer term, can be a better fit. An advisor can compare them.
How Corin approaches the choice
Corin is a licensed California real estate broker, not a lender. An advisor reviews the facility, runs both paths in the sizer and shows the numbers side by side, and lenders make their own credit decisions.
Timelines are typical ranges after a complete file and are subject to lender approval, appraisal, title, and diligence. They are not guaranteed.
Frequently asked questions
Can I get a HUD 232 loan on a newly built facility?
HUD has a separate Section 232 new construction program, and refinancing a completed facility generally looks for at least 3 years of operating history in Corin's assumptions. A newly built facility often uses construction financing and then a bridge before it reaches the refinance box.
How long does a bridge loan last?
Corin's senior-housing bridge assumption is 36 months. Terms and extensions vary by lender.
Is a bridge loan more expensive than HUD 232?
Usually, yes on an annual basis: bridge loans are floating-rate and interest-only, and HUD 232 is fixed-rate and fully amortizing. The comparison that matters is total cost over the period you will hold each loan, including closing costs on both.
Keep going
Sources
- HUD Handbook 4232.1 and prior MIP schedule
- Corin underwriting assumptions, reviewed 2026-10-31
This article is general information, not legal, tax or investment advice. Program rules change by notice; confirm current terms with a lender.
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