Rural Health - HUD 242 Program

HUD 242 Program

The Federal Housing Administration (FHA) within the U.S. Department of Housing and Urban Development (HUD) helps hospitals access affordable financing for capital projects. FHA insurance enables clients to enhance their credit worthiness because their debt is backed by the full faith and credit of the United States Government.

Uses for FHA-insured loans include construction financing, refinancing, modernization, remodeling, equipment, and expansion. FHA insurance can be used for new or existing hospitals and also in conjunction with purchases of existing hospitals.

To be considered for mortgage insurance, a hospital must meet certain minimum eligibility requirements. A list of these requirements may be viewed on the FHA's website at www.hud.gov/offices/hsg/hosp/hsghospi.cfm.

In the case of a hospital in a state without a Certificate of Need (CON) program like Kansas, one requirement for this program (often referred to as the "HUD 242" Program) is that an independent feasibility study be commissioned through an appropriate state agency (this requirement is waived for Critical Access Hospitals).

To help Kansas hospitals with financing needs, KDHE has entered into a memorandum of agreement with HUD pertaining to the recommendation, selection, and payment of a financial consultant for the preparation of an independent study of market need and feasibility.

For more information contact Chris Tilden at ctilden@kdhe.state.ks.us or (785) 296-7439, or visit the FHA website at www.hud.gov/offices/hsg/hosp/hsghospi.cfm.