Availing for a multifamily loan? Try Fannie Mae

Availing for a multifamily loan? Try Fannie Mae

Are you planning to refinance an apartment building which holds several units? Are you interested in investing in a two-home property recently listed in the local property market? Then multifamily financing is for you. However, which loan type among the many is the most feasible to avail? Try the Fannie Mae multifamily loan for your investing needs.

Unlike a conventional mortgage, a portfolio loan or a short-term multifamily loan, which have 4%-12% interest rates, the government-backed Fannie Mae only charges a minimum of 3% to a high of only 6%.

Largest Government-sponsored Financing Product

Fannie Mae is the largest provider of financing for the multifamily market. It provides support for affordable investments in both individual and group properties, and for securing loans underlying such properties. Also, Fannie Mae helps those who want to invest in properties like apartment buildings, housing communities, and cooperatives with five or more individual units via DUS (Delegated Underwriting and Servicing) lenders. Under the nationwide DUS program, lenders are empowered to underwrite, close, and sell loans on properties that have not yet been reviewed by Fannie Mae.

Terms and Considerations

Before deciding to avail of the loan, some terms and important information must be considered:

1. The loan amount ranges from $100,000 – $5,000,000+ (with a maximum loan-to-value ratio of 80%).

2. A typical down payment is pegged at 20%.

3. Average lender fees may range from 0% – 1% on loan origination fees, 2% – 5% on closing costs, and 1% for a prepayment penalty.

4. On average, the amount of time for a loan to be approved is 60 to 90 days.

5. The building must have two to five or more units, with 85% minimum occupancy, at 9-month liquidity at the minimum, and at least three months of stable occupancy. One must also have a personal credit score of at least 680, and a debt-service coverage ratio of at least 1.25.