Multifamily / Apartment Buildings

Fannie Mae Multifamily Financing

Fannie Mae is one of the nation’s leading secondary market sources of capital for apartment building financing. Fannie Mae provides mortgage capital for conventional, affordable housing, cooperatives, senior housing, student housing, manufactured housing communities and mobile home parks nationwide. Fannie Mae's apartment loan program offers many distinct advantages over traditional bank programs, including: long-term fixed rates up to 30 years, high LTV ratios up to 80%, and nonrecourse financing (no personal guarantee to the principals). Fannie Mae's offerings include:

Fannie Mae Multifamily Loans (Small)


Simplified loan approval process for long term fixed-rate financing for apartments, manufactured housing, mobile home parks, and cooperative apartments.

Loan Amount

$1,000,000 – $3,000,000 nationwide - up to $5,000,000 in major markets

Loan Terms

Fixed rates for 5, 7, 10, 12, 15, 20 and 30 years


Up to 30 years, based on the age and condition of the property

Prepayment Penalty

Yield maintenance and step-down options available


Non-recourse lending 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 of the loan term or loan assumption


Typically expect to see 90% occupancy for the previous 3 months


Non-recourse loans are assumable with the Lender’s consent and a 1% fee

Taxes and Insurance Escrows

Maybe waived on lower LTV loans

Net Worth and Liquidity

Net worth and liquidity requirements must be met

Replacement Reserve Escrows

To be determined based upon appraisal and engineering reports

Rate Lock

Rate lock occurs after a 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


45-60 days from complete application to closing

Fannie Mae Multifamily Loans (Large)


Long term, fixed-rate financing for the purchase or refinance of apartment buildings, mobile home parks and cooperative properties

Loan Amount

$3,000,000 and up

Loan Terms

Fixed rates for 5, 7, 10, 12, 15, 20 and 30 years


Up to 30 years, based on property condition; Interest-only financing is available

Loan to Value Maximum

Up to 80%

Coverage Minimum

Typically 1.25x, 1.20x in certain markets


Domestic single asset borrowing entity is required

Interest Rate

Subject to “tiered” LTV ratio (55%, 65%, and 80% tiers)

Prepayment Terms

Yield maintenance and step-down prepayment options available

Third Party Reports

MAI Appraisal, Physical Needs Assessment, and Environmental Phase I Assessment are required, plus Seismic Report may be required for properties in Seismic Zones 3 and 4


Real estate taxes, insurance, and replacement reserves subject to underwriting guidelines

Application Fee

$10,000; covers 3rd party reports and processing/underwriting costs

Legal Fees

$8,000 to $12,000 varying with characteristics of the deal


45-60 days from application to closing; dependent on 3rd party report timing and borrower’s submission of due diligence

Rate Lock

Typically, lock occurs after the commitment is issued; Early Rate Lock option is available, allowing rate lock within 3-4 weeks of the application


The loan is assumable, subject to lender approval.

Freddie Mac Multifamily Loan Program (Small Balance)

Freddie Mac is another nationwide source of mortgage capital for apartment building financing. Up until recently, Freddie Mac focused exclusively on large balance loans. Now, Freddie Mac has unveiled a small balance apartment loan program to compete with Fannie Mae. These loans have very competitive rates, flexible prepayment options, and allow for cash out. These loans are called hybrid ARMs as they have fixed rates for the initial 5, 7, or 10 years followed by an adjustable-rate period and 30-year amortizations.  Available options include a five-year fixed followed by a 15 year adjustable, seven-year fixed followed by a 13 year adjustable, and a 10 year fixed followed by a 10 year adjustable. All loans come with step down prepayment penalties (such as 5%, 4%, 3%, 2%, 1%) instead of yield maintenance.

Loan Amount

$1 million to $5 million

Loan Purpose

Purchase or refinance, including cash-out refinances


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




Credit Score

Minimum of 650

Interest Only

Interest-only loans are available


Minimum occupancy of 90% for 90 days


Escrows for taxes and insurance may be waived

Replacement Reserves

Not usually required

Rate Lock Deposit

1% at rate lock, refundable at closing


Annual and lifetime caps on all adjustments



Bank Multifamily Mortgage Program

In addition to offering loans from agency lenders Fannie Mae and Freddie Mac, we also offer many different bank and portfolio loan programs. While the agency lenders typically have the lowest rates available in the market, many times the borrower would be better off obtaining an apartment building loan from a traditional portfolio lender. Often times, a portfolio product will better serve the needs of the borrower by offering more flexible underwriting and loan terms.  Some of the key advantages to a portfolio or bank loan include:

Flexible underwriting guidelines

Flexible prepayment penalties Properties that are in need of repairs, maintenance, or updating Properties in less than desirable markets Properties in smaller markets Borrowers with difficulty providing tax returns Borrowers with past credit issues Properties with less than stellar cash flow Borrowers who are not citizens or Green cardholders Mixed-use properties containing commercial income Properties that house college students in college towns Loans that require cross-collateralization with other properties HUD contracts, HAP contracts, and Section 8 tenants acceptable Mobile home parks and manufactured housing communities Purchases where the down payment results from a gift from family members Loans with long-term amortization and no balloon payments