Fannie Mae
Fannie Mae Multifamily Loans
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For commercial real estate investors, Fannie Mae Multifamily loans offer a reliable way to access lower-cost financing. As one of the largest sources of capital in the U.S. multifamily market, these loans support the purchase and refinancing of a wide range of properties, including senior housing, student housing, five or more unit apartments, and other multifamily property types.
Understanding how Fannie Mae loans work is key before leveraging them for investments.
Fannie Mae Loan Highlights
Eligible Properties:
- Multifamily
- Including student housing
- Apartments
- Affordable housing
- Assisted living
- Mobile home parks
- Healthcare facilities
Loan Amount Range:
- Minimum $1,000,000
- DUS Program Minimum: $3,000,000
Interest Rate:
- Fixed rates vary
- Floating rates start at 2.30% over LIBOR (see current LIBOR rates)
Loan Term:
5–30-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; no premium in final 90 days
Advantages of Fannie Mae Loans
Tenant Flexibility: Up to 80% of tenants can be students or military personnel; higher concentrations require specialized Fannie Mae programs.
Flexible Terms: Loan terms and amortization schedules range from 5 to 30 years.
High LTV: Up to 80%, enabling borrowers to finance more of the property’s value.
Property Type Flexibility: Supports senior housing, manufactured housing communities, and other multifamily property types.
Disadvantages of Fannie Mae Loans
Strict Occupancy Requirements: Borrowers must ensure tenant mix and property use meet program criteria.
Borrower Requirements:
- Net worth at least equal to the requested loan amount
- Liquidity to cover 9–12 months of debt service
- Minimum credit score of 680
- No recent negative credit events
- Available to single-asset U.S. borrowers; indirect foreign ownership possible with proper structuring
Documentation: Extensive pre-closing and due diligence documentation is required, potentially slowing approval.
Types of Fannie Mae Multifamily Loans
Fannie Mae Standard DUS
The most commonly used Fannie Mae product is ideal for acquiring or refinancing stabilized properties with five or more units. Minimum loan amounts are $5 million, increasing to $7 million in some markets.
Terms:
- Use: Acquisition & refinancing
Amount Borrowed: $5 million+
When to Use: Primary option for most commercial multifamily borrowers
Fannie Mae Small Loans
Designed for smaller properties (5–50 units). Loan amounts generally range from $750,000 to $5 million ($7 million in select markets). Only for stabilized, existing properties.
Terms:
Use: Acquisition & refinancing
Amount Borrowed: $750,000–$5 million
When to Use: Smaller multifamily investments
Fannie Mae Affordable Housing (MAH)
Supports preservation and sustainability of affordable housing. Targets Low Income Housing Tax Credit (LIHTC), RAD, Section 202/236, Section 8, and Rural Housing Service Section 515 properties. Terms: 5–30 years; variable and fixed rates available.
Terms:
Use: Acquisition & refinancing of affordable housing
When to Use: Sustainable, subsidized, or affordable rental communities
Fannie Mae Green Financing
Supports energy and water efficiency retrofits for single-asset properties. Loans provide preferential pricing and additional proceeds for retrofits; Green Building Certification may improve terms.
Terms:
Use: Environmentally focused property improvements
When to Use: Energy and water efficiency projects
Fannie Mae Manufactured Housing
Finances high-quality manufactured housing communities, including mobile home parks. Terms: 5–30 years, with interest-only options in some cases. Flexible prepayment options available.
Terms:
Use: Acquisition & refinancing of manufactured housing
When to Use: To reduce costs and maintain affordability for residents
Fannie Mae Multifamily Loans FAQ’s
What Are Fannie Mae Multifamily Loans?
Fannie Mae Multifamily has been a reliable source of funding for investors in multifamily properties for over three decades. Fannie Mae’s Delegated Underwriting and Serving (DUS) model enables an easy way to secure financing for the purchase of these properties.
The organization offers several options when it comes to apartment and multifamily financing. There are a few key differences between these loans. For example, they are non-recourse loans. The loans are also priced to a 30-year term and maintain a fixed rate throughout that time. In addition to that, there is 80 percent leverage. All of these features help to make these loans a much more attractive option than other financing offers available for this type of commercial investment.
To obtain a Fannie Mae loan, individuals applying for it must provide ample documentation and show their experience in the sector. This often includes providing a formal application and a plan for using the funds. It may include a trailing 12-month operating statement as well as current rent roll and occupancy reports (that include lease-end dates). In addition to this, the agency requires interior and exterior photos of the property to be taken or displayed on a website.
Borrowers must also provide a personal financial statement that shows a clear indication of owned real estate by that person. The agency also expects to learn more about the borrower’s current multifamily properties, if any. If none are owed, they then require a real estate resume that outlines their experience in the industry.