Opinion: FHA has a fix for hospital tax-exempt financing

Written by Steve Hunt, Love Funding | November 21, 2017 | Published by Becker's Hospital Review

The Tax Cuts and Jobs Act passed by the House of Representatives on November 16 held an unwelcome surprise for non-for-profit hospitals: the elimination of tax-exempt financing for 501(c)(3) organizations, among other things.

However, the Senate markup, dated November 14, was a bit more tolerable. Below is a summary of tax reform provisions being discussed on the Hill, which could increase borrowing costs for not-for-profit hospitals, and how the FHA 242 hospital program could benefit more hospitals as a result: 


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The information available here will guide you the loan process and give you a sense of the documentation we’ll need to process your transaction. Upon engagement, we will customize these materials based on your asset and the type of financing that best suits your needs. As always, we are available to answer any questions or concerns you may have.

Term Sheets

HUD’s loan program for acute care hospitals (including critical access hospitals) provides financing for the new construction, expansion, modernization, equipment and refinancing of existing debt. Love Funding has deep experience executing a variety of hospital finance transactions, including FHA 242, new market tax credits, traditional bond financing and USDA loans.

Non-recourse, assumable financing for the purchase or refinance of existing hospitals. The costs of new capital projects (i.e., construction and/or equipment) may be included in the loan, provided they are less than 20% of the loan amount. Facility must be a licensed acute care hospital. Borrower may be non-profit, for-profit or a public entity.


Streamlined FHA program designed to allow borrowers with existing FHA insured loans to lower the interest rate, extend the term, fund project repairs and increase the replacement reserve. All borrowers with existing 242 mortgages may apply for FHA mortgage insurance under this program.


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 very attractive interest rates.



HUD Guidance

Hospital Mortgage Insurance Statute
Hospital Mortgage Insurance Regulation (24 CFR Part 242) 
Implementation of CFR Parts 200 and 242, Revisions to the Hospital Mortgage Insurance Program (ML 08-42)
Section 242/223(f) Hospital Refinance Program Final Rule 5334-F-02
Complete Hospital Mortgage Insurance Handbook


Application Materials

Coming Soon

Steven Hunt
Senior Director | Kansas City, KS

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