Fannie Mae Fixed Rate Apartment Loans

Fixed Rate Multifamily Loans With Fannie Mae Guaranty

FNMA DUS Loans were created in 1989 to provide Fannie Mae multifamily loans which meet the needs of developers and owners of multifamily projects seeking short- and long-term, fixed-rate, non-recourse financing. Fannie Mae instituted an underwriting and processing license arrangement with privately-held mortgage brokers who would take “top end” risk on mortgage loans for the opportunity to underwrite and close loans without the pre-permission of Fannie Mae. This allowed Fannie Mae to build a network of strong professional bankers who would originate, process, underwrite, commit, and close mortgage loans under a Fannie Mae guarantee of principal and interest payments to the mortgage investment market.

While Fannie Mae is a GSE (Government Sponsored Enterprise) and not part of the federal government; it’s mortgage securities were (and continue to be) deemed virtually a “Full Faith and Credit” of the federal government. Thus, a borrower receives an interest rate only slightly higher than those provided under FHA. Additionally, one of the key features of the all Fannie Mae DUS Programs is that the borrower’s contact is with the DUS mortgage broker and not with a government agency. Underwriting and processing times tend to be relatively fast and unless a special waiver is needed for a particular element of a transaction, very straightforward.

Fannie Mae Fixed Rate Apartment Loans Terms

Eligible Properties

Existing income-producing multifamily properties with at least three stable months of 90% occupancy or better. Properties can be newly constructed or recently rehabilitated.

Amortization and Loan Terms

25 or 30 years depending on property’s age with balloon terms of 5,7,10, 15, 18 years or full term loans of 20, 25, or 30 years

Minimum Loan Size

Minimum programmatic loan size is $1,000,000 but preferred minimum is $3,000,000

Personal Liability

None recourse for monetary default with typical carve-outs

Eligible Borrowers

For-profit individuals and entities and not-for-profit single asset entities

Prepayment

All loans are subject to a prepayment penalty calculated using either a yield maintenance or defeasance formula for all but the last six months of the term of the loan. These terms can be modified by adjusting the interest rate.

Maximum Loan Refinancing

The Lesser of:

1. The amount supported by using a 1.25 to 1.00 debt service ratio.
2. 80.0% of appraised value

There are no statutory limits to loan amounts

Interest Rate

Market interest rates change daily. Call for quote.

Assumability

All loans are assumable and transferable at anytime for a 1.00% fee

Origination Fee

Negotiable

Escrows

Required for property taxes, insurance, and replacement reserves as calculated by the underwriter

Repairs/Replacements

125% to 150% of the estimated cost of repairs per the physical needs report. Funds released upon completion.

Subordinate Financing

No third party subordinate financing, however Fannie Mae Supplemental Loans are allowed beginning 12 months after the initial first mortgage loan closing.

Preliminary Submission Package

• Location map and property description and photos (or website info)
• Unit mix showing type, number, size, and current rent of all units
• Description of commercial space if any
• Last three months rent rolls along with year-to-date financial statements
• Last full 36 month operating statements or pro-forma if recently completed construction
• Business resume and financial statement of principals and entity
• Terms of existing debt if any