How to Finance Healthcare Real Estate in 2025

Healthcare real estate is a unique asset class — one shaped by demographic certainty and operational complexity. As America’s population ages and demand for care accelerates, healthcare properties continue to draw interest from investors and lenders alike. But not all healthcare real estate is created equal.

For commercial real estate brokers, understanding the differences between subtypes — and how lenders evaluate them — is critical to structuring successful deals. This guide is part of our longer, in-depth look at how to finance every type of commercial property.

What Is Healthcare Real Estate?

Healthcare real estate encompasses properties where medical or senior care services are delivered. Some of these properties operate much like traditional CRE (with long-term leases and NNN structures), while others involve businesses where operations and occupancy are deeply intertwined — making them harder to underwrite and finance.

Editor's note: I've included medical office buildings, or MOBs, in a separate article about office real estate. These properties behave quite differently (and are looked at very differently) from most of the assets we'll talk about here in this post.

For brokers, the challenge is aligning the right subtype with the right lender type — and setting client expectations accordingly.

Subtypes of Healthcare Real Estate

Assisted Living

These communities provide housing and daily support services (e.g., meals, personal care, medication management) for seniors who require some help but not 24-hour medical supervision. Revenue is largely private-pay and driven by occupancy and pricing power, but operations are labor-intensive.

Financing Note: Lenders will underwrite both the real estate and the operator. HUD/FHA and select private lenders remain active here, but require significant operator experience.

Independent Living

These communities cater to older adults who do not require regular assistance. Think of them as hospitality-focused housing with age restrictions and amenities. Revenues are typically private-pay and lease-based.

Financing Note: Because operations are lighter, lenders may treat these assets more like traditional multifamily, especially if tied to a strong brand and located in desirable areas.

Memory Care

These facilities offer secure housing and specialized care for residents with Alzheimer’s, dementia, or other cognitive impairments. Operational complexity and staffing requirements are high.

Financing Note: High acuity care means lenders will scrutinize licensing, staffing ratios, and operator experience. HUD is active here, but the borrower must be highly qualified.

Rehab Facility

Short-term rehabilitation centers serve patients recovering from surgery, injury, or illness. Some are attached to skilled nursing facilities or hospitals, while others are standalone.

Financing Note: Heavy reliance on Medicare/Medicaid reimbursements introduces regulatory and revenue risk. Financing often requires specialized lenders or healthcare REITs.

Hospital

Full-service hospitals are among the most complex and capital-intensive real estate assets. Revenue is primarily insurance-based, and operations are highly regulated.

Financing Note: Most hospitals are financed through bond markets, large institutional lenders, or government programs. These deals require deep underwriting and a track record of financial performance.

Healthcare Land

Land intended for future development of healthcare assets — typically MOBs, assisted living, or hospitals — can carry significant upside and entitlement risk.

Financing Note: Land loans are speculative and typically require strong sponsorship, local knowledge, and a clear development plan. Bank lenders dominate this space, often with full recourse.

Where to Find Capital for Healthcare Real Estate

• HUD/FHA: Popular for assisted living, memory care, and skilled nursing. Long-term, fixed-rate, nonrecourse loans — but require experienced sponsors and lengthy approvals.
• Banks and Credit Unions: Active in independent living, rehab, and land financing. Expect full recourse and tighter leverage.
• Specialty Healthcare Lenders: Focused on operations-heavy properties. Offer flexible structures but demand operator track record.
• REITs and Private Debt Funds: Particularly interested in portfolios or triple-net leases with strong operators.

What Lenders Are Watching

• Operator Strength: For anything operational (assisted living, memory care, rehab), the experience and financial health of the operator are central.
• Regulatory Risk: State and federal oversight can dramatically impact cash flow. Licensing issues or compliance lapses are major red flags.
• Payor Mix: Facilities heavily reliant on Medicare or Medicaid are viewed as higher risk. Private-pay revenue is generally preferred.
• Market Need: Especially for new developments, lenders want to see clear demographic drivers and limited local competition.

Final Thoughts

Financing healthcare real estate requires more than just a lender list — it demands a deep understanding of operational realities and risk tolerance. For brokers, success comes down to matching the right asset subtype with the right lender and setting realistic expectations around leverage, structure, and timing.