Senior housing is short on new beds. Need keeps rising. Few new sites are underway. That gap is your chance. But you need the right loan.
This guide is plain and short. It shows what a build costs in 2026. It shows which loans fit which deals. It also shows what lenders check first.
Quick Answers
- A new senior housing site costs about $388,830 per unit in 2026, per CBRE.
- Most lenders want you to put in 25% to 35% of the cost.
- A HUD 232 loan is non-recourse and runs for 40 years. It is also slow.
- A bridge loan lets you start fast. You swap it out once the site is full.
- New owners can qualify. They hire a licensed team with a proven record.
- Most deals fail on budget gaps, not on need.
Why Need Is So Strong
The Census Bureau says all Baby Boomers will be 65 or older by 2030. One in five Americans will be past 65. The oldest Boomers turn 80 this year. That is when many need daily help.
Harvard’s Joint Center for Housing Studies warns that supply will lag. It sees 79 million people past 65 by 2035. The Population Reference Bureau sees 82 million by 2050.
Now look at supply. NIC MAP says senior housing was 89.9% full in mid 2026. That covers the 31 top markets. Half of them are in the top 90%. Stock grew just 0.4% in a year. Fewer than 16,000 units are being built. Need has beaten new supply for 20 straight quarters.
A build takes about two years to open. So a site you start now opens into a tight market. Rents in senior care rose 4.9%. Profit margins topped 25% in 2025. That is the best since 2018.
One warning. Assisted living was 87.9% full in early 2026. That is less than independent living. Local data beats national data. Study your own area first.
What It Costs to Build in 2026
Costs jumped. CBRE’s 2026 survey found an average of $388,830 per unit. That is $364 per square foot. It is up nearly 24% since 2023. Old guides still cite $317,400. That is a 2022 number. Do not use it.
Here is how the money splits, per CBRE:
| Cost Item | Share | Notes |
| Hard costs | 72.5% | Site work, shell, roof, systems |
| Soft costs | 16.2% | Design, legal, permits, fees |
| Land | 8.1% | $16,000 to $36,600 per unit |
| FF&E | 3.2% | About $11,900 per unit |
Two more facts matter. Only about 55% of the space can be rented. Halls, dining, and care rooms use the rest. And memory care costs more. Builder briefs show $363 to $452 per square foot for it.
CBRE says new sites earn about 8.1% on cost. Sales price at a 7% cap rate. That gap is your profit. It is thin if costs run high. So plan a real cushion. Most lenders want 5% to 10% of hard costs.
Your Construction Loan for Assisted Living Facility Options
Each loan has one job. Pick by speed, track record, and risk.
| Loan | Typical Size | Term | Best For |
| HUD 232 | 75% of value | 40 years | Long-term owners |
| Bank | 60% to 75% of cost | 2 to 5 years | Local pros |
| Bridge | 65% to 80% of cost | 1 to 3 years | Speed |
| Private | 65% to 80% of cost | 1 to 2 years | Deals banks skip |
| SBA | 80% to 85% of cost | Up to 25 years | Small owners |
HUD 232 Loans
This is the top pick for long holds. The HUD 232 program backs loans for senior care. The rate is fixed. You pay interest only while you build. Then the loan pays off over 40 years. It is non-recourse. Your own assets stay safe.
Know the rules:
- The site needs at least 20 beds.
- Cash flow must cover debt 1.45 times.
- Most sources cap new work at 75% of value. Non-profits get 80%.
- Only about 25% of units can be independent living.
- Federal wage rules apply.
- Work cannot start before HUD gives its firm nod.
Plan on six months or more. Many take longer. The last rule matters most. It is why many start with a bridge loan.
Bank Loans
Banks lend 60% to 75% of the cost. They want you to sign for the debt. They want proof you have built this kind of site. Rates can be good. Fees are low. But terms are short. You must pay it off when it ends.
Bridge Loans
A bridge loan pays for land, site work, and the build. It can cover the fill-up too. Many lenders wait 12 to 24 months. Then you take out a long loan. Bridge loans close fast. You pay for that with a high rate.
Private Loans
Private lenders look at the deal. They weigh the site, the plan, and the care team. They can close in weeks. Many add a pay reserve. So you owe no cash while you build. Terms are short. Rates are high.
SBA Loans
SBA loans fit small homes run by their owners. The 504 loan often needs 15% to 20% down. The 7(a) loan can run 25 years. Both require the owner to run the place.
Want more on cost limits? Read our guide to commercial construction loan LTC limits. Need top leverage? See our post on a max loan-to-cost construction lender.
The Bridge to HUD Plan, Done Right
Many guides make this sound easy. It is not.
HUD calls a job new only if no work starts first. Break ground on a bridge loan and the deal changes. HUD then sees a full, stable site. So the HUD loan is a swap, not a build loan.
Plan in two steps:
- Use bridge debt to build and fill the site.
- Swap it for HUD debt once results are steady.
Ask your lender which path fits. Ask what proof HUD needs. Often it is six months or more of good results. Set your bridge term to match. Add a cushion.
What Lenders Check
Lenders see this as a business, not just a building. They ask two things. Can this team run it? Will the cash pay the debt?
The care team. Lenders like teams that have opened two or three sites. If you have not, hire a licensed firm with a good record. Lenders check their state reports and their staff. Share the contract terms up front.
Your cash. Plan to put in 25% to 35% of total cost. Land you own counts. So does cash. So can a partner.
Cash flow. Lenders test if income covers debt. Banks often want 1.30 times. HUD wants 1.45 times. This test can cap your loan more than the cost test does.
Reserves. Many lenders want six to 12 months of loan payments in cash. Some want net worth near the loan size.
Licenses. Each state licenses senior care. Some also ask for a need permit. The National Conference of State Legislatures says 35 states and D.C. have such a program. Many aim at nursing beds. Rules vary. The National Academy for State Health Policy has a state scan. Check yours before you buy land.
Market study. A neutral firm must study your area. It looks at age, income, rival sites, and rents. Lenders read it first.
Site items. Expect a zoning nod, a site plan, and a Phase I report.
A Worked Example: Why Cash Flow Beats Cost Ratios
These are round numbers. This is not a quote.
Say you plan 80 units. At $388,830 each, the total is about $31.1 million.
- A bank at 65% lends about $20.2 million. You put in $10.9 million.
- A lender at 75% lends about $23.3 million. You put in $7.8 million.
Now test cash flow. At 8.1% on cost, the site earns about $2.5 million a year when full. At 1.45 times, yearly debt pay can be $1.74 million at most. At 1.30 times, it can be $1.94 million.
So your rate and term set the true loan. A high rate can shrink it. Run both tests.
Check the pace too. Say you sign three new people a month. An 80-unit site needs about two years to hit 90%. You lose money in that time. So you need a pay reserve and a cash reserve. Most plans set aside 2% to 5% for it. Many lenders ask for more in soft markets.
Our post on cost overrun financing for developers shows how to guard a budget when prices jump.
Memory Care, Add-Ons, and Rehabs
Memory care wings. These need locked doors, safe yards, and loop halls. They need more staff too. Rents run higher. So do costs. NIC data shows bigger move-in deals in memory care than in assisted living. So lenders check staffing plans and prices. Do not assume a set rent gain. Show local proof.
Add-ons. If you own a good site, more beds can pay. Fixed costs spread out. Lenders like a record you already have. Draws come in steps, so care goes on.
Rehabs. Turning empty independent units into assisted or memory care can lift income. You need no new footprint. HUD calls it a big rehab when work tops 15% of the new value. Two or more big systems also count.
Conversions. Some buyers turn hotels or offices into senior homes. Costs vary a lot. Our posts on adaptive reuse construction lenders and financing an office building conversion cover the basics.
Mistakes That Sink Loan Requests
- Old costs. A 2022 budget looks thin.
- No care plan. Lenders will not guess who runs it.
- Small reserves. A slow fill-up drains cash fast.
- No state check. A license delay can stall it all.
- Ignoring who pays. Harvard’s housing work found only about 13% of older adults could pay for assisted living without using savings. Know your renter’s budget.
- Thin cushion. Prices shift mid-build. A private lender can rescue a stuck job, but it costs more. See our note on a private lender for mid-build projects.
Five Steps to Get Funded
- Build your package. Add plans, a line-item budget signed by your builder, and a five-year plan.
- Pick your care team. Sign a licensed firm early if you are new.
- Compare money. Weigh HUD, bridge, bank, and private debt side by side. See our page on private debt funds for construction. Also read about non-bank commercial builder loans.
- Push on terms. Ask about reserves, draw dates, and time to extend.
- Close and draw. Track each draw against the budget.
Work With Commercial Construction Loans
We have 30 years of lending experience. Our network has 200+ lenders. We fund builds up to $100 million nationwide. That covers senior housing. See all our loan products or start at our home page.
Not sure where to start? Contact our team. Send your plan. We will match it with the right lender. Our FAQ page may help too.
Take the Next Step
Senior housing supply is tight. Costs are high. A sound loan plan makes the difference. Talk to our team about your new build, memory care wing, or rehab. We will help you find the right capital fast.
FAQs
How much does it cost to build assisted living in 2026?
CBRE’s 2026 survey shows $388,830 per unit, or $364 per square foot. Hard costs are about 72.5% of it. Local costs vary. Get a builder quote early.
How much cash do I need to put in?
Most lenders want 25% to 35% of total cost. Land you own counts. HUD can allow less, but it is slower.
Can a first-time developer get a loan?
Yes. Hire a licensed firm with a strong record. Lenders will lean on it. You still need cash, reserves, and a solid market study.
What cash flow test do lenders use?
They divide yearly net income by yearly debt payments. Banks often want 1.30. HUD 232 needs 1.45.
How is HUD 232 different from a bank loan?
HUD 232 is backed by the government. It is non-recourse and fixed for up to 40 years. But it is slow and strict. A bank loan is fast but short. You also sign for the debt.
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