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Fannie Mae Multifamily Loans
Fannie Mae is one of the largest sources of apartment loans in the United States, providing non-recourse multifamily financing in amounts between $1 million and $100 million.
- Fannie Mae DUS Loan Program
- Fannie Mae Multifamily Small Loan Program
- Fannie Mae Affordable Housing Loan Program
- Moderate Rehabilitation Supplemental Loans for Affordable Properties
- Fannie Mae Senior Housing Loan Program
- Fannie Mae Student Housing Loan Program
- Fannie Mae Military Housing Loans
- Fannie Mae Cooperative Apartment Loans
- Fannie Mae Fixed-Rate Loans
- Fannie Mae Manufactured Community Housing Loans
- Fannie Mae Green Multifamily Financing
- Fannie Mae Green Financing Terms
- Fannie Mae ARM 7-6
- Get Financing
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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- Fannie Mae DUS Loan Program
- Fannie Mae Multifamily Small Loan Program
- Fannie Mae Affordable Housing Loan Program
- Moderate Rehabilitation Supplemental Loans for Affordable Properties
- Fannie Mae Senior Housing Loan Program
- Fannie Mae Student Housing Loan Program
- Fannie Mae Military Housing Loans
- Fannie Mae Cooperative Apartment Loans
- Fannie Mae Fixed-Rate Loans
- Fannie Mae Manufactured Community Housing Loans
- Fannie Mae Green Multifamily Financing
- Fannie Mae Green Financing Terms
- Fannie Mae ARM 7-6
- Get Financing