Fannie Mae Financing for Multifamily, Student Housing, Affordable Housing, and Senior Living 

Fannie Mae multifamily loans are among the most desirable types of multifamily financing. Fannie Mae is a GSE, or government-sponsored entity, which agrees to purchase apartment loans from lenders after they close, reducing the amount of risk on the lender’s balance sheet. Key insights about Fannie Mae apartment loans include:

• Terms: Fannie Mae’s loan purchasing program is why lenders agree to such great terms, such as LTVs up to 80-85%, terms up to 20 years with amortizations of 25+ years, and a variety of prepayment options. Plus, most loans are non-recourse, meaning that the lender cannot attempt to repossess a borrower’s personal property if the borrower defaults on their loan.

• Loan Requirements: To qualify for these “agency” loans, borrowers need strong sponsorship, a reputable property management company, and may also need previous multifamily ownership experience, particularly if they are attempting to self-manage the property.

• Loan Volume: In 2020, Fannie Mae provided a record $76 billion in multifamily loans to apartment investors across the country, with $7.8 billion of those loans going to affordable housing properties. Fannie Mae also provided $5.5 billion in manufactured housing community financing, much of it for affordable properties.

• Affordability Benefits: Like HUD and Freddie Mac, Fannie Mae provides special financial benefits to affordable housing syndicators and developers, including higher LTVs, lower DSCRs, and other perks.

• Lots of Options: Unlike banks and HUD (but much like Freddie Mac), Fannie Mae provides 20+ multifamily lending options, including specialized options for green housing, LIHTC (low-income housing tax credit), small apartment loans, and bridge loans.

Prospective Fannie Mae Multifamily Loan Terms

• Size: $1 million to $100 million+

• Terms: 5-30 years

• Maximum LTV: 75%-80% 

• DSCR: 1.20x+ required, as low as 1.00x for affordable properties 

• Term: Up to 30 years

• Amortization: Up to 30 years

• Interest Rates: Fixed and variable rates available, interest-only (I/O) options available 

Pros and Cons of Multifamily Fannie Mae Loans

Pros:

• Most loans are fully non-recourse with bad-boy carve-outs (exceptions for borrower fraud or intentional bankruptcy)

• Low fixed and variable-rate terms, comparable to HUD, Freddie Mac, and CMBS

• Flexible repayment options including yield maintenance, step-downs, and defeasance

• Provides an array of loan options for affordable housing, low-income housing tax credits (LIHTC), student housing, seniors housing, mobile home parks, and particularly large and small multifamily deals

Cons: 

• Loans may take 3+ months to close for small properties (with longer times for larger deals)

• Require strong sponsorship; a sponsor must generally have a net worth of at least 100% of the loan amount, not including their personal residents.