Bedford Lending
HUD programs

HUD 231 Senior housing construction & rehab

An additional HUD option for building or substantially rehabilitating rental housing for older adults or people with disabilities.

Program at a glanceDocuments & videosProgram detailsThe process

Program at a glance

Term
Up to 40 years, fully amortizing; economic-life limits apply.
Interest
Fixed for the loan term.
Loan structure
Construction and permanent financing in one loan.
Cost / value benchmark
Up to 87%; 90% for qualifying affordable or rental-assisted properties.
Debt coverage (DSCR)
At least 1.15×; 1.11× for qualifying categories, including MIP.
Recourse
Nonrecourse; completion obligations apply.
Annual MIP
0.25% under the current multifamily schedule.

The lowest applicable sizing result sets the loan amount. Debt coverage compares underwritten income with loan payments, including mortgage insurance.

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Documents & videos

Program GuideOpen PDF
All handoutsAll videos
Program details & considerations

Section 231 is designed for rental housing serving residents age 62 or older and/or people with disabilities. We can compare it with Section 221(d)(4) before choosing the financing approach.

The occupancy plan, services, development budget and borrower structure matter. Send us a project description and preliminary budget so we can discuss the appropriate application path with HUD.

MAP links this program’s loan ratios to Section 221(d)(4). Read together with Mortgagee Letter 2025-03, the general benchmarks are up to 87% with at least 1.15× debt coverage for market-rate housing, or up to 90% with at least 1.11× coverage for qualifying LIHTC properties with a rent advantage and properties with rental assistance on at least 90% of units. The lowest applicable sizing test controls the loan amount. The separate middle-income option under Mortgagee Letter 2026-01 is limited to Section 221(d)(4).

For new construction, the percentage applies to HUD replacement cost. For substantial rehabilitation, it applies to as-rehabilitated value instead. Section 231 generally requires at least eight units and the program’s elderly or disability occupancy rules. BSPRA/SPRA may be available for eligible new construction without a developer fee, but not for Section 231 substantial rehabilitation.

Eligible uses & property features

  • Purpose-built senior rental housing
  • New construction and substantial rehabilitation
  • Program comparison before application

What to consider

Independent rental housing and licensed residential care are different financing cases. We review the proposed services and occupancy restrictions before recommending a multifamily or healthcare program. Section 231 has its own occupancy rules and a value-based limit for substantial rehabilitation.

Eligibility, proceeds, terms and timing depend on the property, underwriting and current HUD requirements. This overview is not a loan commitment.

Loan processing timeline

  1. Program comparison & HUD discussion

    Review the occupancy plan, services and development budget. Confirm whether Section 231 or another HUD program is the better fit.

  2. Preliminary application

    Prepare the preliminary exhibits HUD requires for the selected processing route.

  3. Firm application preparation

    Complete plans, cost review, reports and borrower exhibits.

  4. HUD review & commitment

    Respond to HUD comments and review the commitment conditions if approved.

  5. Initial closing & construction

    Coordinate closing and construction advances, then complete cost certification and final endorsement.

The schedule depends on the project and required reviews.

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