Fannie Mae ARM 7-6 Loans
Fannie Mae ARM 7-6 Loans are non-recourse, start at just $750,000, permit LTVs up to 80%, and can be converted to fixed-rate financing anytime between the first day of the second year and the first day of the sixth year of the loan.
Fannie Mae 7-6 Adjustable-Rate Financing for Multifamily Properties
Fannie Mae 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. 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.)
Keep reading below to learn more, or click here to download our easy-to-read Fannie Mae ARM 7-6 loan term sheet.
Qualify for a fannie Mae arm 7-6 Loan!
Sample Fannie Mae Terms For ARM 7-6 Loans 2021
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 LTV: 80%
Minimum DSCR: 1.00 (at max. lifetime interest rate)
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)