Fannie Mae Affordable Housing Preservation Loans

Long-Term Debt for Rent-Restricted Property

Fannie Mae's Affordable Housing Preservation execution finances or refinances stabilized rental properties that carry recorded rent and income restrictions. The purpose is in the name. This is capital for keeping existing affordable units affordable, not for building new ones.

The term range is what separates it from most affordable executions. Five to 30 years, with amortization to 35 years. A 30-year term on restricted property is a long runway, and it is the reason preservation deals often out-compete a shorter agency loan even at a slightly higher coupon.

Which Properties Qualify?

Fannie names six categories: expiring Low-Income Housing Tax Credit deals, refinancings of existing tax-exempt bond deals, properties eligible for the Rental Assistance Demonstration program, properties with HUD Section 8 Housing Assistance Payments contracts, properties with existing Rural Housing Service Section 515 loans, and loans insured under Sections 202 or 236 of the National Housing Act.

The restrictions themselves must be recorded and must meet one of three tests: 20% or more of units rented to families at or below 50% of area median income, 40% or more at or below 60% of AMI, or a project-based Section 8 contract covering 20% or more of units.

Terms confirmed against the Fannie Mae Affordable Housing Preservation term sheet at multifamily.fanniemae.com/financing-options/affordable-loans/affordable-housing-preservation, fetched July 31, 2026.

What About the Soft Debt Already on the Property?

This is the question that decides most preservation deals, and Fannie's answer is precise. Hard subordinate debt, meaning debt requiring scheduled principal repayment, is permitted only from a public, quasi-public, or not-for-profit lender, and combined coverage across all of it cannot fall below 1.05x.

Soft subordinate debt is permitted subject to conditions, including a cap on payments at 75% of available property cash flow after senior liens and operating expenses are paid.

Those two rules are why a preservation deal with three layers of city and state soft debt takes months rather than weeks. The seniority, the payment waterfall, and the intercreditor terms all have to be papered before Fannie will fund. Start that conversation with your subordinate lenders on day one.

Why Is Coverage 1.20x Rather Than 1.25x?

Restricted rents are more predictable than market rents. A Section 8 HAP contract or a recorded LIHTC agreement caps what you can charge, which caps the downside as well as the upside, and typically means near-full occupancy with a waiting list. Fannie prices that stability into the coverage requirement, and 5 basis points of coverage relief at 80% LTV is meaningful proceeds on a large deal.

Compare against the conventional fixed-rate product at 1.25x and 80% and you can see exactly what the restriction buys you.

Where This Fits Among Fannie's Affordable Executions

Fannie publishes a wide affordable menu, and preservation is the general-purpose permanent loan in the middle of it. Bond financing options include MBS as Tax-Exempt Bond Collateral and Tax-Exempt Bond Credit Enhancement. Forward commitments cover 4% and 9% LIHTC construction. Standard FHA Risk Sharing offers better pricing on MAH deals through a partnership with HUD.

Our Fannie Mae affordable housing overview maps the full set, and the risk sharing page covers the execution that most often beats this one on rate.

What Should You Have Ready?

The recorded regulatory agreement with its expiration date, every subordinate note and its payment terms, the HAP contract if there is one, three years of operating statements, and a current rent roll showing restricted rents against market. Standard third-party reports are required: appraisal, Phase I environmental site assessment, and property condition assessment.

Send us the restriction documents and the soft debt stack. We will tell you what sizes and what has to be resubordinated first.