Fannie Mae Multifamily loans are ideal for commercial real estate investors to obtain lower costing financing. In the United States, these loans are the largest sources of capital in this market. Opting for Fannie Mae multifamily loans allow individuals to purchase and refinance multifamily properties, including student housing, senior housing, apartments with 5 or more units, and various other types of properties.
Investing in commercial real estate through Fannie Mae multifamily loans is a great opportunity for many investors but one must understand how these loans work.
| Eligible Properties | Multifamily properties (e.g., student housing, assisted living, military personnel housing, apartments, affordable housing, mobile home parks, health care facilities, etc.) |
|---|---|
| Loan Amount Range | At least $1,000,000 (Fannie Mae DUS program minimum is $3,000,000) |
| Interest Rate | Fixed rates vary; Floating Rates from 2.30% over LIBOR. See current LIBOR rates. |
| Loan Term | 5 to 30-year fixed-rate loan terms available |
| Amortization | Up to 30 years |
| Maximum LTV | 80% |
| Minimum DSCR | 1.25x |
| Minimum Debt Yield | 7-8% |
| Recourse | Non-recourse with standard "bad boy" carve-outs |
| Prepayment | Yield maintenance (Allows borrowers to prepay the loan without penalty during the final 90 days) |
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Fannie Mae's most widely used loan product for multifamily properties is the Standard DUS (Delegated Underwriting and Servicing) loan. This loan is specifically designed for the purchase or refinancing of properties with five or more units, including both existing and stabilized properties. The minimum loan amount for this program is $5 million (which can increase up to $7 million in select markets).
The Fannie Mae Small Loan Program is a secondary financing option available for borrowers who need smaller multifamily loans. This program is ideal for the purchase or refinancing of existing properties with 5 to 50 units. For this program, loan amounts can vary from $750,000 to $5 million (increasing to $7 million in select markets).
Fannie Mae’s Multifamily Affordable Housing (MAH) loan program supports investors by providing sustainable, affordable housing communities. These loans prioritize subsidized areas and affordability of the rental market in important areas.
Fannie Mae's Multifamily Affordable Housing loan program provides longer-term financing solutions (ranging from 5 to 30 years) with competitive interest rates, more flexible terms, and underwriting requirements than other loans.
Fannie Mae's Green Mortgage-Backed Securities (MBS) program offers a specialized loan option for fixed-income single-asset properties. To apply for this program, investors must take certain measures to apply environmentally friendly and financially sustainable features in their assets.
Fannie Mae's Manufactured Housing Loans offer a specialized financing solution for high-quality manufactured housing communities, including mobile home parks. These loans aim to reduce costs associated with these properties, making them more affordable for residents.
