Davis-Bacon Contractor Checklist
A current preparation checklist for wage determinations, payroll records and labor compliance.
HUD 232 Healthcare construction & substantial rehab
Build or substantially renovate a licensed care facility with construction-to-permanent HUD financing.
Program at a glance
- Term
- Up to 40 years after construction; limited to 75% of remaining economic life.
- Interest
- Fixed for the loan term.
- Cost limit (LTC)
- Up to 90% of HUD replacement cost, with required deductions.
- Value limit (LTV)
- Standard benchmarks of 75%–85% of appraised value; care type and nonprofit status matter.
- Debt coverage (DSCR)
- Standard 1.45× benchmark, including mortgage insurance.
- Recourse
- Nonrecourse; completion obligations apply.
The lowest applicable sizing result sets the loan amount. Debt coverage compares underwritten income with loan payments, including mortgage insurance.
Documents & videos
More program documents 3 files
Construction requirements
Ownership & closing
Healthcare Development Team Experience
Documentation of borrower, operator and management experience, including facility types, locations and responsibilities.
Technical reference
Davis-Bacon Labor Standards Handbook (2023)
Official January 2023 handbook, retained as a dated reference. Later rules, court orders and project instructions may modify its application.
Loan processing timeline
Pre-qualification & engagement
Review the facility concept, market, operator, licensing approach and development budget.
LEAN firm application preparation
Coordinate plans, reports and underwriting for the owner, operator and proposed facility.
Firm submission & HUD review
Submit the application and work through HUD’s questions about the project and financing.
Firm commitment
If approved, review HUD’s commitment and the conditions that must be met before closing.
Rate lock & initial closing
Finalize closing requirements, coordinate the rate lock and close the construction financing.
Construction & final endorsement
Manage construction advances and complete the applicable licensing, cost certification and final endorsement requirements.
The schedule depends on the project and required reviews.
Common questions
What types of properties qualify for HUD healthcare financing?
Section 232 covers qualifying skilled nursing, assisted living and board-and-care facilities. Memory care may qualify within an eligible licensed facility. HUD reviews licensing, care services, bed count and the property’s operating history. Hospitals and outpatient clinics are not financed under Section 232.
How much healthcare experience does the team need?
HUD generally expects the borrower, operator and management agent’s principals to have at least three years of successful experience with multiple facilities offering the proposed types of care. Experience with only one facility requires a longer history. Three years is a starting point, not an automatic qualification. We also review each participant’s responsibilities, relevant market experience and, for construction, development and lease-up experience.
What should I send for an initial healthcare review?
Start with the facility’s location, licensed beds or units, care types, occupancy and recent operating statements. Include existing debt details and any planned purchase or repairs. For the team, send a list of facilities, locations, care types, bed counts, dates and each principal’s role. For construction, add the preliminary budget and development plan.