Skip to the main content.

Assisted Living Hard Money Loans

Apply Now

Assisted Living Hard Money Loans: A Guide to Bridge Financing Options

Assisted living hard money loans provide owners and operators with the capital to build, purchase or improve their senior housing property. An assisted living facility can use an asset-based hard money loan to purchase a new property and make necessary upgrades to improve resident livability, or increase cash flow before refinancing into a traditional long-term bank loan. 

This article will cover several important aspects of senior housing or assisted living hard money financing, including:

    1. What is a Hard Money Loan?
    2. Types of Senior Living Properties Financed by Hard Money Loans
    3. Best Examples of Assisted Living Hard Money Loans
    4. Costs and Pricing for Assisted Living Hard Money Loans
    5. Risks Associated With Assisted Living Hard Money Loans
    6. Exit Strategy: Long-Term Financing Options for Senior Housing Facilities

What is a Hard Money Loan? 

For those accustomed to borrowing money from a bank, you might not be familiar with hard money lending. Hard money loans, or private money loans, are two different names that describe the same thing: equity-based, short-term (12-36-month) bridge loans made by private lenders and used by real estate investors on their investment properties. The loans are secured by real estate, which is a hard asset — and why it’s called hard money.

There are five different types of private lenders who fund hard money loans: 

  1. Individual Trust Deed Investors
  2. Real Estate Investors Lending Money
  3. Family Offices
  4. Conduit Lenders
  5. Mortgage Funds

Hard money loans can be obtained through mortgage brokers, like First Capital Trust Deeds (FCTD), or directly through a private lender. There are advantages and disadvantages of working with brokers and direct lenders, which I detail in this article. (Don’t worry, I address my bias as a mortgage broker for 20+ years!)

Types of Senior Living Properties Financed by Hard Money Loans

Hard money lenders will finance different types of assisted living and senior living facilities. These include:

  • Assisted Living Facilities
  • Nursing Homes
  • Continuing Care Retirement Communitiesi
  • 55+ Residential Developments

Best Examples of Assisted Living Hard Money Loans

FCTD has worked with several assisted living facility owners over the years, brokering short-term hard money bridge loans secured by their real estate. Below are some of the loan scenarios closed on assisted living facilities:

  1. Acquisition - 65% LTV Purchase
  2. Construction - San Diego
  3. Mid-Construction Completion - LBC
  4. Refinance Existing Hard Money Loan
  5. Second Mortgage - Fairfield, CA
  6. Cross-Collateral Blanket Loan - Fresno
  7. Bridge Loan for 24 Months - Fresno
  8. Vacancy Rate Too High for Conventional Financing
  9. Refinance - Bridge-to-Sale Loan
  10. Residential Care - Unique Property - 8BA 8BA

As mortgage brokers, FCTD is able to secure financing for projects that because of borrower, cashflow, or property conditions, aren’t a good match for banks or other institutional lenders. FCTD’s large database of lenders, from individuals to mortgage fund managers, allows us to help investors obtain the right bridge loan financing for their present situation and take them to where they want to be — a property sale or a refinance into a long-term institutional loan.

Costs and Pricing for Assisted Living Hard Money Loans

No two hard money loans have the same pricing, especially for assisted living facilities. Pricing depends on capital availability for specific loan scenarios and geographic areas.

For example, there are hundreds of private lenders that would fund a 12-month bridge loan for an assisted living facility in Los Angeles, California, but just a few dozen lenders who would finance a similar property in Fargo, North Dakota. The more lenders offering loans, the more competitive the options, and the greater the likelihood the borrower will get a lower cost for their hard money loan.

The more complicated the loan scenario (i.e. construction financing or a cross-collateral blanket loan against several properties), the higher the pricing.

As mortgage brokers, we work with numerous lenders that can lend against an assisted living facility with many different types of loans. However, there isn’t a one-size-fits-all pricing model. Each loan has its strengths and weaknesses, and lenders will price according to the risk involved.

I’ve written about the various pricing and expense details a borrower should expect in this article: Hard Money Loan Pricing, Interest Rates, Fees, Closing Costs. It’s filled with critical information and worth a read so you know what costs to expect.

Risks Associated With Assisted Living Hard Money Loans

Let’s be honest — hard money loans are the option of last resort for an assisted living facility owner or operator. The reasons for this are simple:

  • Higher Costs – Closing costs, points, fees and interest rates are much steeper than bank financing.
  • Shorter Term – Bridge loans usually span 12-36 months.

The risk to an owner is that the higher costs of servicing the monthly debt can drain liquidity faster than a long-term institutional loan. A $3 million loan at 12.00% carries a $30,000/month interest-only payment whereas a $3 million loan at 5.50% has a $17,034/month amortizing payment (principal and interest). Carrying costs are a very real risk that brokers and lenders will evaluate to make sure the borrower has sufficient liquidity to cover the debt service expense.

Short-term hard money loans mature (become due in full) in 12, 24 or 36 months, at which point the borrower must make the balloon payment. Real estate projects are fraught with delays, whether it’s hold ups with construction, permits, licensing, occupancy, or take out financing. The best way a borrower can avoid these timetable risks is to pay on time and communicate early and often with the lender about delays as they happen. Borrowers who do are more likely to receive an extension (for a fee) on the maturity date and final balloon payment, if needed.

Exit Strategy: Long-Term Financing Options for Senior Housing Facilities

As I mentioned above, hard money loans are not the ideal financing solution for assisted living or senior living facility owners. Hard money loans are a stop gap solution, whereas institutional loans, often government-backed, are ideal for stabilized properties.

Below are the different types of long-term financing that FCTD’s clients have used to pay off their short-term hard money bridge loans:

  1. Fannie Mae Senior Housing Financing:
    Fannie Mae is owned by the United States government. Fannie provides financing for care facilities including Assisted Living (AL), Independent Living (IL), and Alzheimer’s and Dementia Care (ALZ).
  2. Freddie Mac Senior Housing Loans:
    Freddie Mac, also owned by the US government, provides senior housing loan programs for care providers.
  3. HUD-Insured Loans:
    The Federal Housing Authority (FHA) insures HUD-approved lenders against losses on construction and rehabilitation loans for assisted living facilities.
  4. SBA 7(a) & 504 Loans:
    The Small Business Administration (SBA) provides various types of loans for operators of assisted living facilities. SBA financing can be an ideal exit strategy to pay off a hard money bridge loan.
  5. Bank Loans:
    Banks, primarily regional banks, will provide long-term financing for assisted living facilities. It’s common for the owner’s depository bank to provide a 25 or 30-year amortizing loan with a 5, 7, or 10-year fixed rate.
  6. CMBS Loans:
    Non-bank lenders offer privately-financed loan programs that are sold to Wall Street investment banks that package many loans together into a Commercial Mortgage-Backed Security (CMBS). CMBS loans can provide enhanced options unavailable to a borrower through government-backed loans (and vice versa).
  7. Property Sale:
    Some assisted living owners take out a bridge loan prior to selling their property, so they can close quickly and use the cash to renovate before listing. Or, they use the equity in the property as a down payment to acquire a new facility. Upon sale, the loan will be paid off.


Assisted living hard money loans can be a strategic source of capital for owners and operators of senior living facilities, providing a bridge financing option to build, purchase or improve their properties. Hard money loans serve as a viable option when traditional financing is not available because of the property's condition, cash flow, or the borrower's financial situation. These loans are asset-based, short-term, and require high interest rates, points and fees — making them a loan of last resort for most borrowers. However, there are scenarios when hard money loans can help with critical funds for a renovation or as temporary financing in a tight situation.

It's important to note that hard money loans are not a permanent financing solution. Borrowers should explore long-term options, such as government-backed loans, bank loans, or CMBS loans to pay off their hard money bridge loans. Our article has covered the various financing options for assisted living facilities, associated risks, and costs of hard money loans, as well as the exit strategies for borrowers seeking to pay off their loans. Overall, with the right knowledge and support, assisted living facilities can leverage hard money loans to grow and improve their businesses to provide the best experience for their residents.


3 min read

Hard Money Second Mortgages for Assisted Living Facilities

Several years of record low long-term interest rates have fueled demand on second mortgages for Assisted Living...
2 min read

Best Examples of Assisted Living Hard Money Loans

If you’re looking for financing on a senior living property, check out the best examples of assisted living hard money...