Owner-Occupied Medical Office Building Loans

Current Medical Office Mortgage Rates (Updated February 16th, 2026 today's date)

• Owner Occupied

Medical Office Building (MOB) - Definition

A Medical Office Building (MOB) is a commercial property designed for healthcare use, where physicians, dentists, and outpatient providers deliver patient care in professional clinical suites. Unlike general office space, a medical office building is built to support exam rooms, treatment areas, specialized medical equipment, and healthcare-compliant infrastructure.

For financing and real estate purposes, MOBs are often categorized as owner-occupied (the practice occupies a majority of the space) or investment (leased to medical tenants), which affects loan structure, rates, and underwriting. In today’s healthcare market, medical office buildings are valued for stable demand, long-term tenancy, and proximity to hospitals, retail corridors, and residential growth areas.

How to Finance the Purchase of Your Medical Office Building?

Buying your own medical office building can be one of the smartest long-term financial moves for a healthcare practice. Instead of paying rent to a landlord, you build equity, gain control over your space, and lock in predictable occupancy costs while your practice grows.

For most physicians, dentists, and outpatient operators, financing starts with choosing the right loan structure for an owner-occupied property. In many cases, this means using a program that supports lower down payments, longer amortizations, and competitive rates based on your practice cash flow and property strength.

Step 1: Confirm owner-occupancy and property fit

Lenders first evaluate whether your practice will occupy a majority of the building and whether the property is suitable for medical use. Buildings with strong location fundamentals, compliant layouts, and long-term usability typically receive better financing terms.

Step 2: Choose the right loan program

Most borrowers compare:

• Conventional medical office loans for strong-credit borrowers seeking flexible structures
• SBA 504 Financing financing (up to $10 million) for lower equity injection (90% LTV) and long-term stability
• SBA 7a loans for properties (up to $5 million), flexibility or borrowers needing more working capital
• USDA or specialty programs when geography and eligibility align for rural medical office properties

The best option depends on your purchase price, down payment goals, timeline, and practice financials. We suggest comparing options with a commercial mortgage specialis at CLD who specializes in healthcare real estate to find the best fit for your unique situation.

Step 3: Prepare your financial package (application and documentation)

A complete, lender-ready file speeds approvals and improves pricing. Typical items include:

• Practice financial statements and tax returns
• Personal financial statement and credit profile
• Rent roll (if partial tenants) and operating history
• Purchase contract and property details
• Business plan or growth narrative (for expanding practices)

Step 4: Underwrite for cash flow and risk

Medical office underwriting focuses on:

• Practice cash flow and debt service coverage ratio (DSCR)
• PLoan-to-value and equity contribution
• Borrower liquidity and reserves
• Property quality, market demand, and medical tenancy durability

Stronger cash flow, lower leverage, and clear operational history usually lead to better rates and terms.

Step 5: Lock structure and close strategically

Before closing, compare term sheets side by side—not just interest rate, but also amortization, prepayment structure, fees, and recourse. A properly structured loan should support both today’s purchase and your future expansion plans.

Why ownership can outperform leasing for medical practices

Owning your medical office building can provide financial advantages, including:

• Convert occupancy expense into long-term equity
• Stabilize monthly costs with predictable debt service
• Create an asset that may appreciate over time
• Improve operational control over scheduling, build-outs, and patient experience

If structured correctly, medical office ownership can strengthen both your balance sheet and your long-term practice valuation.

FAQs About Medical Office Building Loans