An Association of Health Care Finance Bankers and Consultants



In 1968, Congress looked to replace the Hill-Burton hospital finance program with a new mortgage insurance program within the Department of Housing and Urban Development (HUD).  After enactment of Section 242 of the National Housing Act, HUD has been the major Federal Government credit enhancer of construction financing for hospitals.  Participating hospitals have ranged from major national urban facilities to small rural and critical access hospitals.  

Under Section 242, HUD will insure mortgage loans for the construction, rehabilitation, replacement, and equipping of hospital facilities, as well as refinancing of related existing debt.   HUD Section 242 loans provide fixed interest rates, non-recourse terms, with loan amortization terms of 25-years plus the construction period, and the loans can be up to a 90% loan-to-value.  The construction project can include equipment, with some limitations. 

Over the years, the Committee has worked with HUD and Congress to improve the Section 242 program so that it is available to more hospitals throughout the country.  From updating certificate of need requirements to revising regulations, the Committee has been the industry expert working closely with HUD to keep program requirements in line with hospitals’ needs, while still protecting the HUD insurance funds. 
For more information about Section 242 requirements, please go to HUD’s Office of Healthcare Program’s website at: