The HUD 242 program provides mortgage insurance for acute care hospitals – including Critical Access Hospitals – for loans to finance new construction, expansion, modernization, equipment, and refinancing of existing debt. U.S. Government backing of financing results in AA/AAA credit rating enabling hospitals to obtain low interest rates.

To qualify:

• Facility must be an acute care hospital (i.e., no more than 50% of patient days attributable to the following services: chronic convalescence and rest, drug and alcoholic, epileptic, nervous and mental, mental deficiency, and tuberculosis).
• Mortgage cannot be insured if construction project is already under way.

There is no maximum loan amount; and properties are eligible for a 90% loan-to-value ratio (i.e., can borrow up to 90% of the estimated replacement cost of the project). The loan covers the construction period, plus 25-year, self-amortizing, permanent loan.

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