FACILITY TYPES
What Type of Medical Facility Are You Financing?
Each type of healthcare facility has its own financing considerations — how specialized the buildout is, who occupies it, and whether the owner runs a practice there.
Medical Office Building (MOB)
Multi-tenant physician suitesMulti-specialty buildings housing physicians, therapists, and diagnostic labs. Often near hospitals. Lenders look closely at the tenant mix, lease terms and how easily the suites could be re-leased.
Dental / Veterinary Practice
Owner-occupied, specialized buildoutSingle-practitioner or group practices with specialized plumbing, X-ray shielding, and exam rooms. SBA 504 is a common fit — 10% down for a practice at least two years old (15% for a newer practice), with buildout costs included in the project.
Urgent Care / Surgical Center
Outpatient, high-revenue per sqftFree-standing urgent care, ambulatory surgical centers (ASC), and specialty clinics. Higher buildout cost but strong revenue. Lenders evaluate both property and practice financials. SBA treats hospitals and urgent care facilities as special-purpose property, so an SBA 504 loan needs at least 15% down (20% for a business under two years old).
FINANCING OPTIONS
Loan Options for Medical Properties
SBA programs are often the first option to compare for a practice that occupies its building; investors in leased medical buildings use bank or DSCR loans.
SBA 504
Owner-occupied medical, from 10% downA common choice for dentists, doctors and veterinarians buying their own building. TI and equipment can be included in the total project cost.
SBA 7(a)
Flexible — real estate + equipment + working capitalCombine real estate purchase, medical equipment, buildout, and working capital in one loan. Variable rate.
Conventional Bank
Faster than SBA for established practicesFewer forms and faster than SBA. Best for established practices with strong financials and 25–35% down.
DSCR / Investment
MOB investors, no personal docsFor investors buying multi-tenant MOBs as income properties. No tax returns needed. Based on property NOI.
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
KEY METRICS
What Lenders Evaluate for Medical Office Loans
WORKED EXAMPLE
Example: A Practice Buys Its Building with SBA 504
Example: a practice buys a $2,400,000 building and spends $600,000 on buildout, a $3,000,000 project. Whether SBA counts the property as special-purpose changes the down payment: a general medical office needs 10% from an established practice, while an urgent care center — special-purpose under SBA rules — needs 15%. Assumptions for illustration only: a 6.5% CDC rate fixed for 25 years and a 7.0% bank rate amortized over 25 years, computed with our SBA 504 calculator.
| Medical office (10% down) | Urgent care (15% down) | |
|---|---|---|
| Down payment | $300,000 | $450,000 |
| CDC / SBA loan (40%) | $1,200,000 — $8,102/mo | $1,200,000 — $8,102/mo |
| Bank first mortgage | $1,500,000 — $10,602/mo | $1,350,000 — $9,542/mo |
| Total monthly payment | $18,704 | $17,644 |
| Global DSCR if the practice has $320,000 a year for debt service | 1.43x | 1.51x |
Lenders look at the practice and the owner together — the “global” cash flow — because the practice pays the mortgage. Specialized buildout also matters to the appraisal: exam rooms, imaging shielding and plumbing may add less to the building’s value than they cost, so the appraised value can come in below the project cost. Plan the equity on the project cost, not the appraisal you hope for.
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
THE PROCESS
How Medical Office Financing Works
Define Your Needs
Buying an existing MOB, building new, or purchasing a condo unit in a medical plaza? Share property details, practice financials, and buildout scope.
Submit to BestLoanUSA
Single application covering property, practice, and personal financials. No hard credit pull at this stage.
Advisor Review
Dedicated advisor evaluates whether SBA 504 (lowest down), SBA 7(a) (most flexible), or conventional (fastest) is the best path for your specific practice and property.
Lender Matching
We submit to lenders experienced in medical real estate. You compare the term sheets that come back — rates, TI coverage and equipment financing options.
Underwriting & Appraisal
Lender orders a medical-use appraisal. Provide practice tax returns, P&L, bank statements, purchase contract, and buildout estimates.
Close & Build Out
Conventional: 30–45 days. SBA: 30–90 days (7(a) 30–60, 504 60–90). TI funds disbursed on draw schedule during construction. You move into your purpose-built medical space.
Free tools
Run the numbers
The same metrics a lender checks — free, instant, no signup. Each result links straight into an application.
- SBA 504 Loan Calculator Estimate your SBA 504 loan structure — see the three-part split (borrower, CDC, bank), monthly payments for each portion, and total project financing.
- DSCR Calculator Calculate your Debt Service Coverage Ratio instantly. See if your property qualifies for CRE financing and which loan programs are available to you.
- Commercial Mortgage Calculator Estimate your monthly CRE loan payment, total interest cost, and full amortization schedule. Compare loan structures before you apply.
FAQ
Frequently Asked Questions
How do lenders look at medical office real estate?
Lenders focus on who pays the rent. For an owner-occupied building, that means the practice’s revenue history and global cash flow; for a leased building, tenant quality, remaining lease terms and how specialized the buildout is. Specialized space can cost more to re-lease to a non-medical user, which lenders weigh in the appraisal and loan terms.
How much down payment do I need to buy a medical office building?
With SBA 504, 10% for an established practice buying a general medical office, 15% if the practice is two years old or less or the property is special-purpose (SBA lists hospitals and urgent care facilities), and 20% if both. Conventional bank loans usually need 25–35%. On a $3,000,000 project, that is $300,000 at 10% and $450,000 at 15%.
Can I include buildout costs in my medical office loan?
Yes. SBA 504 and 7(a) both allow tenant improvement costs to be rolled into the total project financing. This includes exam room construction, X-ray shielding, specialized plumbing, ADA compliance, and medical equipment installation. These costs can be financed with the purchase.
I'm a dentist looking to buy my first office. What's the best option?
SBA 504 is often a good fit — a fixed rate on the SBA portion for 10–25 yr, buildout costs included, and 10% down for a practice at least two years old (15% for a newer practice). New practices are eligible. Your practice must occupy at least 51% of an existing building (60% for new construction), and since 2026-03-01 every owner must be a U.S. citizen or national living in the U.S.
Do medical office buildings appraise differently?
Often. The appraiser considers the cost of specialized buildout (which may not transfer to general office use), tenant creditworthiness, and the local healthcare market. Buildout that only a medical user can use may add less to the appraised value than it cost to build.
Can I lease part of my medical building to other providers?
Yes. As long as your practice occupies at least 51% of an existing building (60% for new construction) for SBA, you can lease the rest to complementary providers — specialists, therapists, labs, pharmacies. Rental income from co-tenants helps offset your mortgage and may be counted in underwriting.
What if I'm buying a medical condo unit in a larger building?
Medical condos are financeable through SBA and conventional loans. The lender evaluates both your unit and the overall building's HOA structure, reserves, and common area maintenance. Some lenders specialize in medical condo financing.
Related on BestLoanUSA
Financing options
All loans →- Dental Office A dental office loan finances the space a practice operates from — buying the building or condo, financing a buildout, or acquiring a practice with its real estate. Dentists who occupy the space can use SBA 504 or 7(a) with as little as 10% down. Medical & dentalTenant improvements
- Office An office building loan finances the purchase or refinance of office property, from a single-tenant building to a multi-tenant complex. A business that occupies the space can use SBA 504 with as little as 10% down; investors use bank or DSCR loans, typically up to 75–80% of value. Office buildingsDSCR
- Tenant Improvement Tenant improvement (TI) financing pays for the buildout of a commercial space — walls, electrical, HVAC, fixtures — whether you own the building or lease it. Owners can roll TI into an SBA 504 or conventional loan; tenants often combine SBA 7(a) with the landlord’s TI allowance. Tenant improvementsSBA 7(a)
- Restaurant A restaurant property loan finances the building a restaurant operates from — buying it, building out the space or refinancing. Owner-operators who occupy the property can use SBA 504 or 7(a) with as little as 10% down; investors buying a leased restaurant use bank or DSCR loans. Tenant improvementsSBA 504
Guides & articles
All articles →- Medical Office Building Loans: Financing a Practice Facility How healthcare professionals finance a medical office building: SBA 504 and 7(a), bank loans, down payment, and when owning beats leasing. Medical & dentalOffice buildings
- Pennsylvania Business Loans: SBA, State Programs & Lenders Pennsylvania has two of the most distinct business markets in the country — Philadelphia's dense urban economy and Pittsburgh's tech and healthcare resurgence — plus a vast rural and manufacturing interior. Here's how to navigate financing across the state. Medical & dentalDSCR
- Owner-Occupied Commercial Real Estate Loans: Who Qualifies How owner-occupied commercial real estate loans work — SBA 504, 7(a) and bank options, occupancy rules, down payments — and who qualifies. SBA 504SBA 7(a)
Glossary
All terms →More calculators
All calculators →- TI Allowance Calculator Calculate tenant improvement budgets and total build-out costs. Understand how TI allowances affect your lease economics and landlord investment. Tenant improvements
- Debt Yield Calculator Calculate Debt Yield (NOI ÷ Loan Amount) — the metric CMBS and institutional lenders prioritize over DSCR and LTV. Find your maximum loan amount based on target debt yield. DSCRLoan-to-value
- NOI Calculator Calculate your property's Net Operating Income with a detailed income and expense breakdown. NOI drives your DSCR, cap rate, and property valuation. DSCRNOI