The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) introduced a new “Express Lane” initiative last week to expedite loan applications for residential care facilities, including nursing homes, potentially allowing low-risk borrowers to bypass a lengthy loan queue.

Under specific financial and quality-of-care criteria, Express Lane lending streamlines the review process for loans under the Section 232 program, FHA’s announcement stated. 

Generally, nursing home operators like HUD financing over other types of financing because of its non-recourse, low fixed-rate financing, but HUD loan approvals have become increasingly delayed this year, with growing queues for prospective borrowers in the nursing home sector. And given this, Express Lane lending is a welcome relief, according to financial experts, who told Skilled Nursing News that most operators seeking a HUD loan can expect to close it much sooner.

In fact, new initiative will shave off several months from the loan approval process, according to Steve Kennedy, executive managing director at VIUM Capital. Moreover, HUD expects about 15% of the total Section 232 volume to qualify for the Express Lane, he said.

“The standard HUD queue is running about 2 to 3 months,” Kennedy told SNN. “After an application is assigned to an underwriter, a commitment typically follows in 45 to 60 days and then moves to closing. The new Express Lane lets qualified deals leap-frog the queue, with a commitment targeted in just 5 to 8 days. That trims roughly 4 to 5 months from the process – a major win for borrowers.”

‘Ballooned’ queue in 2025

According to David Young, managing director at Greystone, the HUD queue ballooned to nearly five months in 2025 after several employees accepted early retirement offers following job cuts implemented during the initial days of the Trump administration..

“[The HUD queue] has since come back into about 3 months. Regardless, if a loan qualifies for the Express Lane, that removes 3 months from the timeline of application engagement to closing with HUD, which is meaningful,” Young said.

Greystone is the largest HUD lender, with more than $479 million in capital actively deployed across HUD transactions, bridge loans, and debt placement.

One of the requirements for the Express Lane eligibility, for SNFs, is that they have a 2.0 times debt service coverage ratio, or DSCR, a financial metric used to assess an operator’s ability to cover its debt obligations with its available income.

However, this shouldn’t create hurdles for nursing home operators seeking loans, Young told SNN.

“This is not difficult as skilled nursing facilities are generally valued around 12.5% to 13.5% plus or minus cap rates in HUD appraisals, which generally means that they have debt service coverage ratios above 2.0x in today’s interest rate environment,” he said.

Kennedy agreed.

Also, with HUD’s low, long-term fixed rates – up to 35 years on a refinance – and the Express Lane’s 70% maximum loan-to-value ratio, many SNFs will close with debt service coverage ratio above 2.0 times, Kennedy said. 

To qualify for Express Lane, facilities must also meet strict care standards. Skilled nursing homes must have at least a 2-star overall rating and a 2-star health inspection rating on Medicare.gov, with no “Red Hand” abuse indicators and no serious violations, such as “G” tags or higher, within the past year, according to the FHA announcement.

Additional conditions for Express Lane qualification include no history of FHA insurance claims or recent defaults, no more than 20% of revenue from special uses, stable facility operations with the current operator in place for at least two years, and loan size limits of up to $70 million in the New York metro area and up to $50 million elsewhere.