Fannie Mae 7-6 Adjustable-Rate Financing for Multifamily Properties  

Fannie Mae Insured Loans for Apartment Buildings and Multifamily Developments

Multifamily investors who want adjustable-rate Fannie Mae financing might find the perfect fit with Fannie Mae's ARM 7-6 loan. Unlike it's cousin, the Fannie Mae ARM 7-4, the ARM 7-6 has a smaller minimum loan amount, at $750,000, giving it more flexibility to finance smaller multifamily developments. However, just like the ARM 7-4, the ARM 7-6 has a maximum LTV allowance of 80%, and can be converted to a fixed-rate loan anytime between the first day of the second year and the first day of the sixth year of the loan. Also, just like the ARM 7-4, ARM 7-6 loans are mostly non-recourse, and non-recourse ARM 7-6 loans are fully assumable (with lender approval and a 1% fee.) 

Sample Fannie Mae Terms For ARM 7-6 Loans

Size:  $750,000 minimum loan amount 

Terms:  7 years 

Amortization:  Up to 30 years (interest only options available for eligible borrowers) 

Interest Rate: Based on the 1-month LIBOR plus a margin 

Interest Rate Cap: Determined at rate lock, interest rates cannot increase or decrease more than 1.00% per month 

Maximum LTV80%

Minimum DSCR 1.00 (at max. lifetime interest rate) 

Recourse:  Most loans are non-recourse with standard “bad boy” carve-outs for fraud and other bad acts, loans less than $3 million may be recourse in some areas  

Prepayment Options:  1 year lockout, then a 1% prepayment premium during the adjustable-rate period, though this is waived for the last three months 

Occupancy Requirements: 85% physical occupancy, 70% economic occupancy, 90% physical occupancy for loans under $3 million 

Commercial Space Limits: Commercial space must be no more than 35% of the net rentable area and must produce no more than 20% of the property's income

Fixed-Rate Conversion: The ARM 7-6 can be converted to a  10/9.5 or a 7/6.5 fixed yield maintenance loan any time between the first day of the second year of the loan and the first day of the sixth year of the loan, without any prepayment penalties. The amount of the loan cannot increase, but borrowers can apply for supplemental financing. 


  • Competitive interest rates 
  • Most loans are non-recourse 


  • Requires third-party reports including a property appraisal, property condition assessment, and a Phase I Environmental Assessment   
  • Requires replacement reserves (minimum of $250/unit per year) 
  • $12,500 application deposit and $3,000 processing fee required 
  • 1% origination fee also required 
  • Does not allow for supplemental financing before conversion to a fixed-rate loan
  • Only 30 day rate lock commitments are available (for a fee)