How to finance buying a care home

Most buyers finance a care home with a commercial mortgage secured on the property and its business, topped up with their own deposit. Lenders look at the trading accounts, the occupancy, the inspection rating and the buyer's experience of running care services, because the loan is repaid from the profits of the home rather than from rent.

Some buyers add a second source of money, such as vendor finance, where the seller leaves part of the price owed, or equity from investors. Others use short-term bridging finance where a purchase needs to complete quickly or the home needs work before a mortgage lender will accept it.

The right mix depends on the size of the home, how well it trades and how much the buyer can put in themselves.

The deposit for a care home purchase is usually larger than for a residential mortgage, because lenders lend against a trading business with its own risks. The amount depends on the home's trading record, its inspection rating, the buyer's experience and the lender, and it is set case by case rather than as a fixed share of the price.

Buyers new to the sector usually need a larger deposit than experienced operators, and some lenders want to see a registered manager with a strong record in place from the first day.

Stamp duty or the devolved land tax, legal fees, valuation fees and working capital for the first months also need funding, on top of the deposit itself.

Lenders value a care home as a going concern, meaning the property, its fixtures and the trading business together. The valuer looks at the profits the home earns, often measured as earnings before interest, tax, depreciation and amortisation, known as EBITDA, along with occupancy, fee levels, staffing costs and the condition of the building.

A home with steady occupancy, a good inspection rating and a balanced mix of private and local authority residents usually values more strongly than one relying on a single source of fees.

The valuer also gives a view of the value if the business stopped trading, which matters to the lender if the home ever had to be sold. How lenders compare on valuation and terms is set out on the care home lenders page.

Anyone running a care home in England must register with the Care Quality Commission, and lenders check that the buyer will be able to register before they lend. In Scotland, Wales and Northern Ireland, the Care Inspectorate, Care Inspectorate Wales and the Regulation and Quality Improvement Authority play the same role.

Registration is for the provider and the registered manager, not the building, so a change of owner usually means a new registration (Care Quality Commission, Registration under the Health and Social Care Act 2008, accessed 20 Oct 2026). The timetable for this needs to fit the purchase, and lenders usually make registration a condition of the loan.

The home's latest inspection report, and any action plan arising from it, are read closely by lenders and valuers.

The usual steps are to agree a price in principle, gather the home's trading accounts and occupancy records, prepare a business plan, and approach lenders directly or through a broker. Once a lender agrees terms, it instructs a specialist valuer, and its solicitors review the property, the business, staff contracts and the regulator's records before the loan completes.

A business plan sets out how the buyer will run the home, including staffing, fees, occupancy and any planned improvements. Lenders use it to test whether the profits will cover the loan repayments with room to spare.

Due diligence on staff, contracts with local authorities and the condition of the building takes time, so purchases often take several months from offer to completion.

Buyers without care sector experience can still finance a purchase, though fewer lenders will consider it and terms are usually tighter. Lenders look for a strong registered manager, an experienced team staying on after the sale, a realistic business plan and a larger deposit, and some prefer the buyer to have worked in health or social care.

Starting with a smaller home that trades well, rather than one needing a turnaround, usually makes the finance easier to arrange. Firms that arrange care home finance for first-time buyers and operators are listed on the care home mortgage brokers page.