Fannie Mae Multifamily Loans

Fannie Mae offers a wide variety of options when it comes to multifamily and apartment financing. The fact that Fannie Mae multifamily loans are non-recourse, offer 30-year fixed-rate financing, and up to 80% leverage makes them incredibly attractive to commercial real estate investors of all kinds.

Fannie Mae DUS Loan Program

The Fannie Mae DUS Loan Program is Fannie Mae's most popular multifamily financing product, offering terms including:

• Loan Size: $3 million with no upper limit

• Unit Requirements: 5 unit minimum

• Leverage: 80% maximum LTV allowance

• Additional Financing: Mezzanine financing is available

• Rate locks: Both early and extended available

• Recourse: Non-recourse (standard carve-outs apply)

• DSCR: Minimum 1.25 DSCR

• Assumability: Assumable (with lender approval and 1% fee)

In addition to the terms mentioned above, 35% of space on DUS loan properties can be filled by commercial tenants (capped at 20% of rental income). Plus, DUS loans are available for multifamily properties that have a large concentration of student or military tenants (up to 80% allowed). However, projects with military or student tenant concentrations above 80% are required to use Fannie Mae's military or student housing programs.

Click here to download our easy-to-read Fannie Mae DUS loan term sheet.

Fannie Mae Multifamily Small Loan Program

For borrowers looking for smaller multifamily loans with faster, more streamlined processing, the Fannie Mae Multifamily Small Loan Program could be the perfect fit.

This program offers terms including:

• Loan Size: Between $750,000 and $9 million

• Unit Requirements: 5-unit minimum

• Leverage: 80% maximum LTV allowance

• Closing Costs: Borrowers can finance up to 3% of closing costs

• Documentation: No tax return requirement

• Interest Options: Fixed and hybrid ARM interest options available

• DSCR: Minimum 1.25x DSCR

In addition to not requiring tax returns, these loans typically require less stringent documentation when it comes to physical needs and environmental assessments. And, just like DUS loans, Fannie Mae Small Loans have a 35% commercial space limit and a 20% rental income limit for commercial tenants.

Click here to download our easy-to-read Fannie Mae Small Loan term sheet.

Fannie Mae Affordable Housing Loan Program

Investors who want to finance or refinance an affordable housing development need look no further than the Fannie Mae Affordable Housing Loan Program. The Affordable Housing Loan Program is available specifically for properties with Section 8 Housing Assistance Program (HAP) contracts and expiring LIHTC properties. This program offers:

• Loan size: $1 million or more

• Leverage: 80% maximum LTV allowance

• Amortization: 30 years

• DSCR: Minimum 1.15 DSCR

• Underwriting: Flexible underwriting guidelines

• Assumability: Assumable (with lender approval and a 1% fee)

Moderate Rehabilitation Supplemental Loans for Affordable Properties

In addition to its traditional Affordable Housing Loan Program, Fannie Mae also offers supplemental loans for moderate rehabilitation of affordable properties. In many cases, these loans can be significantly less expensive than refinancing the property. These loans offer terms including:

• Interest Options: Fixed and variable rate loans available

• Loan Term: 5-30 years, must terminate at the same time as the original mortgage

• Amortization: Up to 35 years

• Rate locks: 30-180 day locks available

Fannie Mae Senior Housing Loan Program

The Fannie Mae Senior Housing Loan Program is a great choice for developing properties that specifically provide independent living, assisted living, or Alzheimer’s/Dementia care for senior citizens. This loan program offers terms including:

• Loan size: $5 million minimum (with some exceptions)

• Loan term: 5 to 30 years

• Amortization: 30 years

• DSCR: 1.30 (for 100% independent living), 1.40 (for projects with 50% or more assisted or Alzheimer’s/Dementia care, 1.45 (for 100% Alzheimer’s/Dementia care projects)

• Leverage: 80% maximum LTV allowance

• Rate locks: 30-90 day locks available, extended rate locks may allow borrowers to lock rate up to 1 year before closing

• Assumability: Assumable (with lender approval and a 1% fee)

Click here to download our easy-to-read Fannie Mae Seniors Housing Loan term sheet.

Fannie Mae Student Housing Loan Program

For housing developments that have an 80% or higher concentration of undergraduate or graduate students, the Fannie Mae Student Loan Housing Program can be an excellent fit. To be eligible, projects cannot be on university-owned land, cannot have dining facilities, and typically need 12-month leases co-signed by parents. The Fannie Mae Student Loan Housing Program offers terms including:

• Loan size: $1 million minimum

• Loan term: 5 to 30 years

• Amortization: Up to 30 years

• Leverage: 75% maximum LTV

• Interest Options: Fixed and adjustable rates are available

• DSCR: 1.30 minimum

• Rate locks: Rate locks are available at commitment (extended 6-month locks are also available)

• Assumability: Assumable (with lender approval and a 1% fee)

Click here to download our easy-to-read Fannie Mae Student Housing Loan term sheet.

Fannie Mae Military Housing Loans

For projects with a 20% or higher concentration of military tenants, especially those near military bases, the Fannie Mae Military Housing Loan Program can provide an effective source of financing. The terms of the Fannie Mae Military Housing Loan Program include:

• Loan size: $1 million minimum, no maximum

• Unit Requirements: 5 unit minimum

• Leverage: 75% maximum LTV

• Interest Options: Fixed and adjustable rates available

• DSCR: 1.30 minimum

• Assumability: Assumable (with lender approval)

Fannie Mae Cooperative Apartment Loans

Through its Cooperative Multifamily Loan Program, Fannie Mae offers loans for cooperative apartments, in which residents collectively own the building, and the units are leased back to the shareholders. The program's terms include:

• Loan size: $1 million minimum, no maximum

• Loan term: 5 to 30 years

• Amortization: Up to 30 years

• Leverage: 55% maximum LTV

• DSCR: 1.00 minimum (actual operations), 1.55 (based on market rents)

• Assumability: Assumable (with lender approval)

Fannie Mae Fixed-Rate Loans

Fannie Mae's Fixed-Rate Loans have flexible terms and amortizations of up to 30 years, competitive interest rates, and allow LTVs of up to 80% for conventional properties.

• Size: Varies

• Terms: 5 to 30 years

• Amortization: Up to 30 years

• Maximum LTV: 80% for conventional properties (other properties vary by asset class)

• Minimum DSCR: 1.25x for conventional properties (other properties vary by asset class)

• Recourse: Most loans above $750,000 are non-recourse with standard “bad boy” carve-outs

• Prepayment Options: Yield maintenance or prepayment premium options are available

• Eligible Properties:

  • Stabilized conventional properties, seniors housing properties, manufactured housing communities, student housing developments, and Multifamily Affordable Housing (MAH) developments

  • Properties must have 5+ units (50+ pad sites for manufactured housing communities)

  • The borrower must be credit-worthy and a U.S.-owned single-asset entity (indirect foreign ownership interest allowed with proper structuring)

• Advantages:

  • Very competitive interest rates

  • Up to 80% LTV

  • Most loans are non-recourse

  • 30- to 180-day rate locks available (streamlined rate locks also available)

  • Loans are assumable with lender approval

• Disadvantages:

  • Requires replacement reserves

  • Requires third-party reports including a property appraisal and a Phase I Environmental Assessment

Click here to download our easy-to-read Fannie Mae Fixed-Rate Loan term sheet.

Fannie Mae Manufactured Community Housing Loans

For manufactured housing communities or mobile home parks with a minimum of 50 pad sites, Fannie Mae offers financing through its Manufactured Housing Loan Program. The program's terms include:

• Loan size: $1 million minimum, no maximum

• Loan term: 5 to 30 years

• Amortization: Up to 30 years

• Leverage: 75%-80% maximum LTV

• DSCR: 1.25 minimum

• Rate locks: Rate locks available at commitment (extended 6 month locks also available)

• Assumability: Assumable (with lender approval)

In addition to having at least 50 pad sites, parks must:

• Be paved

• Offer off-street parking

• Have 75% of the homes owned by tenants

• Not offer pad sites for sale to tenants

• Hitches/jacks must be concealed

Fannie Mae Green Multifamily Financing

For eligible properties, Fannie Mae Green Financing is available for acquisitions, refinancing, and supplemental financing. The three main types of Green Multifamily Financing include:

• Green Rewards: The Green Rewards program includes a free energy and water audit, and both fixed and variable rate loan options.

• Green Building Certification: To qualify for Green Building Certification financing, a building must be certified under an approved program; approved programs include Energy Star Multifamily, LEED BD+C, and NGBS Green Multifamily Building Certification, among others.

• Green Preservation Plus: The Green Preservation Plus program is designed specifically to finance water and energy efficiency upgrades for multifamily affordable housing projects.

Fannie Mae Green Financing Terms

Fannie Mae Green financing terms include:

• Loan size: Varies, depends on the individual situation

• Loan term: Up to 30 years

• Amortization: Up to 30 years (Green Rewards, interest-only options available), up to 40 years (Green Preservation Plus)

• DSCR: 1.25 minimum (Green Rewards/Green Building Certification conventional), 1.20 minimum (Green Rewards/Green Building Certification affordable), 1.15 minimum (Green Preservation Plus)

• Leverage: 80% maximum LTV (Green Rewards/Green Building Certification), 85% maximum LTV (Green Preservation Plus)

• Documentation: In some situations, energy and water audits paid for by Fannie Mae

• Interest Options: Fixed and adjustable rates available (Green Rewards/Green Building Certification), fixed-rate only for Green Preservation Plus

• Rate locks: 30- to 180-day rate locks (early/extended rate locks also available)

• Assumability: Assumable (with lender approval and a 1% fee)

Like the Fannie Mae DUS loan, Green Financing projects are permitted to have up to 35% of the rentable area used for commercial property, which can contribute a maximum of 20% of a project's effective gross income.

Click here to download our easy-to-read Fannie Mae Green Rewards term sheet.

Fannie Mae ARM 7-6

Fannie Mae’s ARM 7-6 has a maximum LTV allowance of 80%, and can be converted to a fixed-rate loan anytime between the first day of the second year and the first day of the sixth year of the loan. ARM 7-6 loans are mostly non-recourse, and non-recourse ARM 7-6 loans are fully assumable (with lender approval and a 1% fee.)

Sample Fannie Mae Terms For ARM 7-6 Loans

• Size: Varies

• Terms: 7 years

• Amortization: Up to 30 years (interest only options available for eligible borrowers)

• Interest Rate: Based on the 1-month LIBOR plus a margin

• Interest Rate Cap: Determined at rate lock, interest rates cannot increase or decrease more than 1.00% per month

• Maximum LTV: 80%

• Minimum DSCR: 1.00 (at max. lifetime interest rate)

• Recourse: Most loans are non-recourse with standard “bad boy” carve-outs for fraud and other bad acts, loans less than $3 million may be recourse in some areas

• Prepayment Options: 1-year lockout, then a 1% prepayment premium during the adjustable-rate period, though this is waived for the last three months

• Occupancy Requirements: 85% physical occupancy, 70% economic occupancy, 90% physical occupancy for loans under $3 million

• Commercial Space Limits: Commercial space must be no more than 35% of the net rentable area and must produce no more than 20% of the property's income

• Fixed-Rate Conversion: The ARM 7-6 can be converted to a 10/9.5 or a 7/6.5 fixed yield maintenance loan any time between the first day of the second year of the loan and the first day of the sixth year of the loan, without any prepayment penalties. The amount of the loan cannot increase, but borrowers can apply for supplemental financing.

• Advantages:

  • Competitive interest rates

  • Most loans are non-recourse

• Disadvantages:

  • Requires third-party reports including a property appraisal, property condition assessment, and a Phase I Environmental Assessment

  • Requires replacement reserves (minimum of $250/unit per year)

  • $12,500 application deposit and $3,000 processing fee required

  • 1% origination fee also required

  • Does not allow for supplemental financing before conversion to a fixed-rate loan

  • Only 30-day rate lock commitments are available (for a fee)

Click here to download our easy-to-read Fannie Mae ARM 7-6 loan term sheet.

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