How do lenders value a care home?
A care home is valued as a going concern: a trading business with a building, not a building with a business in it. A specialist healthcare valuer, regulated by RICS, looks at the home’s sustainable earnings (usually EBITDA, profit before interest, tax, depreciation and amortisation), applies a multiple based on the home’s quality and market, and arrives at a value for the business and building together.
The valuer will usually also give a lower figure for the building without the business, such as its value with vacant possession or for another use. Lenders treat that as their downside if the home stops trading. That is why two homes with similar buildings can be valued very differently: trade, not bricks, sets the price. Our guide to care home finance covers the valuation in more depth.
What loan-to-value can a care home borrow?
As at October 2026, lenders active in care typically offer between 60% and 75% of the going-concern value. Experienced operators with a strong trading record reach the top of that range. First-time owners should generally expect to put in 30% to 35%.
Our commercial mortgages page gives 65% to 75% as typical for commercial property. Care can start lower because the lender is lending against a regulated trading business whose value depends on occupancy, staffing and inspection results, any of which can change faster than a building’s value. Where those are strong, the gap closes.
What occupancy and CQC rating do lenders want?
These are the numbers that make or break an application:
- Occupancy. Lenders want sustained occupancy well above the home’s break-even point, with at least 12 months of history, not a recent spike.
- Fee levels and mix. The balance between local authority, NHS-funded and private residents, and whether fees cover the true cost of care.
- Staffing costs. Staff are usually the largest cost. Heavy reliance on agency staff is a warning sign.
- CQC rating. Good or Outstanding gives the widest choice of lenders and the best terms. Requires Improvement narrows the field. Inadequate is very hard to finance.
- Management. A registered manager in post and a team that would hold the home together if the owner stepped back.
Buying the freehold v renting from a landlord
Many operators lease their homes from property investors. Leases often have rent increases linked to inflation, and when inflation runs high, rent can grow faster than fees. That has pushed some operators to buy the buildings they trade from.
Owning turns rent into loan repayments, builds equity, and removes the risk of a rent review you cannot control. But it ties up capital in a deposit, puts maintenance and building costs on you, and adds a large loan to the business. Lenders compare the current rent with the proposed repayments: if the loan costs less than the rent, the case is easier. Some operators hold the building in a separate company from the care business, which our guide to OpCo PropCo structures explains.
First-time operators: can you borrow?
Yes, but lenders want relevant experience. Nurses, registered managers and senior care staff stepping up to ownership are the most common first-time buyers lenders support. They will look for:
- clinical or care management experience, ideally in the type of care the home provides
- a management team in place, especially a registered manager who is staying
- a business plan covering occupancy, staffing and fees
- a larger deposit than an established operator would need
Buying alongside an experienced operator, or keeping the existing manager and team, can make up for a lack of ownership history.
How profitable is owning a care home?
People ask this a lot, and the honest answer is that it depends on occupancy, fees and staffing more than anything else. This is how lenders assess it, not a promise of returns. They take the home’s EBITDA and test whether it covers the loan’s interest and capital repayments with a comfortable margin. They stress that test with lower occupancy or higher costs to see whether the home could still pay.
A home that only works at full occupancy with no agency staff will struggle to borrow, and is a risky purchase. We look at the accounts with you before you commit.
