HUD 232(i) Fire Safety Equipment Loans


If you have a HUD 232 or HUD 232/223(f) loan on a healthcare property, and you’d like some extra funds to update the facility’s fire safety equipment, a HUD 232(i) fire safety loan could be a great way to do so. HUD 232(i) loans have a minimum DSCR requirement of 1.11x, making them fairly easy to get approved for, even if your facility isn’t turning a huge profit. HUD 232(i) loans are primarily used to finance fire sprinkler systems, though other types of fire safety equipment may also be eligible for financing.

HUD 232(i) Loan Sizing

HUD 223(i) fire safety loans are constrained by the lesser of:

  • The Requested Loan Amount: The amount requested in the borrower’s firm application.

  • Amount Based on Debt Service Coverage Ratio (DSCR): Underwritten net operating income (NOI), minus the annual debt service of the property (principal, interest, and MIP), divided by 1.11. Subtract the annual ground rent and the annual special assessment. Then, “divide the difference by the sum of the interest rate, MIP rate and initial curtail rate,” while adding any annual tax abatement savings.

  • Amount Based on 100% of Fire Safety Equipment Cost: This includes:

    • Purchase and installation costs for fire safety improvements

    • Related property improvements, such as renovations to increase property water capacity