Fannie Mae and Freddie Mac are the leading providers of financing for multifamily properties. Below are the program highlights.
Fannie Mae Multifamily Loans
• Loan Amount: $750,000 to $5 million
• Loan Terms: Fixed rates for 5, 7, 10, 12, 15, 20 and 30 years
• Amortization: Up to 30 years
• Prepayment Penalty: Yield maintenance and step-down options available
• Recourse: Non-recourse is available
• Debt Service Coverage: 1.25x minimum
• Loan to Value: Up to 75% maximum LTV for refinances and 80% for purchases
• Subordinate Financing: Supplemental mortgages are available after the first 12 months
• Occupancy: 90% for 90 days
• Assumability: Non-recourse loans are assumable
• Taxes and Insurance Escrows: Maybe waived on lower LTV loans
• Net Worth and Liquidity: Required
• Replacement Reserve Escrows: To be determined based upon appraisal and engineering reports
• Rate Lock: Rate lock occurs after commitment is issued; an early rate lock option is also
available
• Due Diligence Fee: $4,500 – $8,500 non-refundable fee for 3rd party reports and processing
• Timing: 45-60 days from complete application to closing
Freddie Mac Multifamily Loan Program
• Loan Amount: $1 million to $5 million
• Loan Purpose: Purchase or refinance, including cash out refinances
• Loan Terms: 5, 7 and 10 year fixed rate, hybrid ARM and fixed-rate loan options
• Amortization: Up to 30 years
• Property Types: Apartment buildings of 5+ units
• Debt Service Coverage: 1.20x in top markets, 1.25x nationwide
• Maximum Loan to Value: 80%
• Recourse: Non-Recourse
• Credit Score: Minimum of 650
• Interest Only: Interest only loans are available
• Occupancy: 90% for 90 days
• Taxes/Insurance: Escrows for taxes and insurance may be waived
• Replacement Reserves: Not usually required
• Rate Lock Deposit: 1% at rate lock, refundable at closing
• Adjustments: Annual and lifetime caps on all adjustments
• Assumable: Yes
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