In September 2025 HUD published a notice that collapsed the entire tiered structure of multifamily mortgage insurance premiums into a single rate: 25 basis points upfront and 25 basis points annually, for every program in the table. It was the largest single reduction in FHA multifamily MIP in decades, and it eliminated the Broadly Affordable, Affordable-Inclusionary-Voucher and Green categories outright.
Section 232 is not in that table. Neither is Section 242. The notice does not mention health care facilities, hospitals, or the Office of Healthcare Programs anywhere in its text.
This is the single most consequential misreading in the field. We have found current lender term sheets that apply the 0.25%/0.25% rate to 232/223(a)(7), and aggregator pages that imply healthcare borrowers share in the reduction. They do not. Check the MIP line on any healthcare term sheet dated after October 2025 before you rely on its proceeds math.
What the healthcare rates actually are
The Section 232 premium schedule was addressed in a separate notice in June 2025, and the rates it carried forward are unchanged:
| Program | Upfront | Annual |
|---|---|---|
| 232 new construction / substantial rehabilitation | 77 | 77 |
| 232/223(f) refinance or acquisition | 100 | 65 |
| 232/223(a)(7) streamline refinance | 50 | 55 |
| 241(a) supplemental | 72 | 72 |
| 242 hospitals | 70 | 70 |
Compare: apartment 223(f) is now 25 upfront and 25 annual.
What 40 basis points does to a healthcare deal
Annual MIP on a 232/223(f) is 65 basis points against 25 for an apartment 223(f) — a 40 basis point spread, charged every year on the outstanding principal balance. Because MIP is added to the mortgage constant that the debt service coverage test divides into net operating income, that spread does not just raise the carry. It shrinks the loan.
The mechanism is worth being precise about. HUD's DSCR criterion sizes the loan by dividing underwritten NOI by the required coverage ratio, then capitalizing the result at the sum of the interest rate, the MIP rate and any curtail rate. Add 40 basis points to that denominator and the supportable principal falls, before anyone looks at value or cost. On a healthcare facility the effect compounds with the far stricter coverage requirement — 1.45x rather than 1.15x — which is the subject of a separate article.
Why the two notices diverged
FHA's multifamily and healthcare portfolios are administered by different offices, carry different risk profiles and are priced separately. Skilled nursing and assisted living are operating businesses with licensure exposure, reimbursement exposure and management-dependent cash flow in a way that an apartment building is not. The premium differential is deliberate, and nothing in the 2025 notices suggests HUD intends to converge the two schedules.
One change did reach the healthcare programs: the Green and Energy Efficient MIP Initiative was eliminated for all applicable 232 programs, for applications received on or after August 25, 2025. If a pending 232 application was underwritten assuming a 25 basis point green premium, that assumption is gone.
What to do with this
- Re-run the proceeds math on any healthcare term sheet quoting 25 basis points. It is wrong, and the error is in the borrower-favorable direction, which means the sizing is overstated.
- Do not let an apartment comparison set healthcare expectations. An owner who has recently closed an FHA apartment refinance will anchor on 25 basis points and a 1.15x coverage test. Neither applies to the nursing home next door.
- Price the 65 basis points against the alternative honestly. A 35-year, fully amortizing, non-recourse, assumable, fixed-rate loan still has no real analogue in the conventional or agency healthcare market. The premium is the cost of that structure, not a hidden fee.
Primary sources for this article
- Mortgage Insurance Premiums for Multifamily Housing Programs — FR-6522-N-02, 90 FR 45789 (Sept. 23, 2025)
- Mortgage insurance premiums, health care facilities notice (June 26, 2025)
- Section 232 Handbook 4232.1, Section II Chapter 3 (loan sizing)
Figures stated as current are current as of October 13, 2026. HUD revises mortgagee letters and handbooks frequently; where a provision is a draft rather than operative guidance we say so on the page. This is general information, not legal, tax or financial advice, and not a commitment to lend.
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