Medical office buildings (MOBs) are among the most sought-after commercial real estate assets in 2026, and lenders have responded by creating specialized underwriting specifically for healthcare real estate. If you’re financing a MOB, applying traditional office lending criteria will lead to worse terms than your asset deserves. Here’s how MOB financing works.

Why MOB Financing Is Different from Traditional Office

Medical office buildings share a building type with traditional office but have almost nothing else in common from a lending perspective:

  • Tenant stickiness: Medical tenants (doctors, specialists, medical groups, health systems) rarely relocate, their equipment, exam rooms, and patient relationships are deeply embedded in their space. Average tenancy for medical office is 8–12 years vs. 3–5 years for traditional office.
  • Demand driver independence: Healthcare demand is driven by demographics (aging population), not economic cycles. Medical office demand grows regardless of remote work trends or economic downturns.
  • Higher buildout costs: Medical tenants invest $100–$300+ per square foot in tenant improvements, creating extraordinary switching costs that protect occupancy.
  • Health system credit: Hospital-anchored MOBs often carry investment-grade credit behind their rent rolls.

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Lender Options for Medical Office

Lender Type MOB Appetite Loan Size Max LTV Notes
Life Insurance Companies Very High $5M+ 65–70% Best pricing; long-term leases required
CMBS Conduit High $3M+ 65–70% Non-recourse; hospital anchor preferred
Agency / HUD (eligible) Medium (healthcare) $3M+ 80–85% HUD 232/223(f) for healthcare-adjacent
Regional / Community Banks High $500K – $15M 65–70% Active MOB lenders in most markets
Debt Funds High $2M – $50M 65–70% Bridge and value-add; fast close
Credit Unions / CDFIs Medium $500K – $5M 65–70% Healthcare mission alignment

How Lenders Underwrite MOBs

Tenant Credit and Lease Structure

MOB underwriting focuses heavily on tenant quality. A hospital health system anchor (investment-grade credit) creates a fundamentally different risk profile than a roster of private practice tenants. Lenders look at:

  • Weighted average lease term (WALT), longer is better; medical tenants with 7–10 year leases are highly valued
  • Tenant credit quality (health system vs. independent practice)
  • Lease structure (NNN, modified gross, full gross), NNN preferred
  • Renewal options and probability of renewal
  • Percentage of health system-affiliated vs. independent tenants

On-Campus vs. Off-Campus Premium

MOBs physically located on a hospital campus or directly adjacent command premium pricing vs. off-campus properties. On-campus MOBs benefit from referral relationships, pedestrian traffic, shared services, and an institutional affiliation that dramatically reduces vacancy risk.

Medical Specialization

MOBs heavily specialized in one medical discipline (oncology, imaging, surgery) carry concentration risk but also significant tenant stickiness, specialized medical tenants almost never relocate. Lenders generally don’t penalize specialization unless the building has a single-tenant profile with no diversification.

DSCR

Medical office DSCR requirements are typically 1.20x–1.25x, lower than traditional office because of stronger tenant quality and lease durability. This is a significant underwriting advantage over conventional office lending.

On-Campus vs. Off-Campus MOBs: Financing Differences

Factor On-Campus MOB Off-Campus MOB
Vacancy risk Very low (hospital affiliation) Low (medical stickiness)
Max LTV 68–72% 63–68%
Rate premium vs. traditional office 75–125 bps tighter 50–100 bps tighter
Lender pool All categories (life companies active) Banks, CMBS, debt funds
DSCR requirement 1.15x – 1.20x 1.20x – 1.25x
Exit cap rate (valuation) Tighter (lower cap rate) Slightly higher cap rate

Rates and Terms for Medical Office Financing (2026)

Loan Type Rate LTV Term Notes
Permanent (life company) 6.75% – 8.00% 65–70% 10–25 yr Best rates; health system anchor preferred
Permanent (bank) 7.00% – 8.50% 65–70% 5–10 yr Amortizing; community/regional banks active
CMBS (non-recourse) 7.25% – 8.50% 65–70% 5–10 yr Non-recourse; hospital anchor or WALT 7+
Bridge (value-add) 9.00% – 11.00% 65–70% 12–36 mo New MOB, lease-up, or repositioning
Construction (MOB ground-up) 9.50% – 11.50% 65–70% LTC 18–36 mo Pre-lease to anchor strongly preferred

Frequently Asked Questions

Are medical office buildings easier to finance than traditional office?

Yes, significantly. Medical office buildings are treated as a separate, more favorable asset class by most CRE lenders in 2026. Lower DSCR requirements (1.20x vs. 1.30x+), higher LTV allowances (65–70% vs. 55–65%), lower rates, and broader lender appetite distinguish MOB financing from traditional office financing. The demographic tailwinds driving healthcare demand and the extraordinary tenant stickiness of medical tenants make MOBs one of the most lender-friendly commercial property types.

What documentation do medical office lenders require?

Medical office lenders require standard commercial documentation plus healthcare-specific items: current signed leases with healthcare tenant information, T-12 operating statement, rent roll showing specialties of tenant practices, hospital affiliation status (if any), and sometimes tenant revenue or patient volume data (for newer or smaller practices) to assess tenancy durability. On-campus MOBs may also require hospital ground lease or parking agreements.

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