Fannie Mae Multifamily Loan
Last Updated: 03/24/2024
Loan Highlights
- Commercial loan for real estate investors, developers, or property owners seeking financing for 5+ units multifamily properties.
- Long-term, fixed-rate financing with competitive terms and flexible options.
- Can be used on refinancing stabilized multifamily properties with five or more units.
- Fannie Mae Multifamily Loans provide attractive financing options for investors seeking to acquire or refinance multifamily properties.
- Ranges from $1 million to several million dollars, depending on property value, location, and borrower qualifications
Interest Rate Estimate
Federal Fund Rate + 1.50% Margin
*The mortgage interest rate calculation above is estimated. The subject borrower for that interest rate is as follow:
- 740 FICO score
- 30 years fixed interest rate
- primary residence
- single family house
Terms and Breakdown:
- Fixed-rate financing with terms typically ranging from 5 to 30 years.
- Loan-to-value (LTV) ratio varies but is typically up to 80% for acquisitions and 75% for refinancing.
- Amortization period up to 30 years.
- Competitive interest rates based on market conditions and borrower qualifications.
- Non-recourse financing available in certain cases.
Requirements:
- Stabilized properties: Properties with a history of stable occupancy and cash flow.
- Borrower experience: Lenders may require borrowers to have experience in multifamily property ownership or management.
- Property condition: Properties must meet Fannie Mae’s eligibility criteria, including minimum property condition standards.
- Environmental and zoning compliance: Properties must comply with environmental regulations and local zoning requirements.
- Documentation:
- Typical Documents: Full documentation (full docs) including property income and expense statements, rent rolls, tax returns, financial statements, and property appraisals.
- Borrowers may also need to provide business plans and projections for acquisitions or renovations.
Derivative or Related Products:
- Freddie Mac Multifamily Loans: Similar to Fannie Mae Multifamily Loans, offering competitive financing options for multifamily properties.
- Commercial Mortgage-Backed Securities (CMBS) Loans: Provide financing for commercial properties, including multifamily properties, by pooling loans and selling them as securities to investors.
Funder and Sponsors:
- Fannie Mae Multifamily Loans are funded by Fannie Mae and originated by approved lenders, including banks, mortgage companies, and specialized multifamily lenders.
Notes:
- Common misunderstandings with Fannie Mae Multifamily Loans include:
- Complexity of eligibility requirements: Borrowers should work with experienced lenders or advisors familiar with Fannie Mae's multifamily lending programs to navigate eligibility criteria and documentation requirements.
- Processing timeline: While Fannie Mae Multifamily Loans offer competitive terms, the application and approval process may take longer compared to other commercial loan options, requiring careful planning and coordination with lenders and other stakeholders.
- Importance of property management: Borrowers should have a solid property management plan in place to ensure the ongoing success and profitability of multifamily properties financed through Fannie Mae Multifamily Loans.