Fannie Mae Loans for Housing With Healthy Design Features
Find out how you can qualify for discounted Fannie Mae loans for affordable housing properties with healthy design features.
If you're a multifamily investor building, renovating, or acquiring one or more affordable housing properties, the Fannie Mae Healthy Housing Rewards program could be a fantastic way to save money and ensure a greater quality of life for your building's residents.
The two major parts of the program are Enhanced Resident Services and Healthy Design, each which has slightly different requirements and provides slightly different incentives to borrowers.
Enhanced Resident Services provides benefits for property owners who provide health and wellness services and/or work and financial capability support to their tenants.
In comparison, the Healthy Design program provides benefits to property owners who incorporate healthy features into their properties, such as fitness centers, green areas, playgrounds, or tobacco-free spaces.
Both of these Healthy Housing Rewards programs confer a variety of benefits upon borrowers, including reduced interest rates, greater flexibility in underwriting, and a variety of fixed and variable-interest rate options. Just like most other Fannie Mae multifamily loans, Healthy Housing Rewards loans are assumable with lender approval.
Sample Fannie Mae Terms for Healthy Housing Rewards Loans in 2024
Size: Varies
Terms: 5- to 30-year fixed and variable-rate loan terms available
Amortization: Up to 35 years
Maximum LTV: Varies
Minimum DSCR: Varies
Recourse: Most loans are non-recourse with standard “bad boy” carve-outs for fraud and other bad acts
Prepayment Options: Yield maintenance or declining prepayment premiums
Eligible Borrowers
60% of the project's units must be affordable for tenants earning 60% or less of AMI (area median income)
Must get either Healthy Design or Enhanced Resident Services certification from an approved provider (properties can only use one benefit, one time, and cannot combine benefits)
0.15% interest rate reduction for certified Healthy Design projects, up to 0.30% interest rate reduction for certified Enhanced Resident Services projects
No set minimum or maximum loan amount
Competitive interest rates
Loans are non-recourse
30- 180 day rate locks available after commitment (streamlined rate locks also available)
All certifications include 100% reimbursement by Fannie Mae
Requires third-party reports including a property appraisal, property condition assessment, and a Phase I Environmental Assessment
For Enhanced Resident Services Certification, a sponsor must be re-certified every 5 years, and the property must be certified every year
Advantages
Disadvantages
Case Study: Improving Chicago Affordable Housing
In Chicago, a multifamily investor named Paulina was seeking to acquire and renovate an affordable housing property. This 50-unit complex was located in a neighborhood that could significantly benefit from enhancements in its residential services and living standards. Paulina's goal was not only to offer affordable housing but also to improve the quality of life for her future tenants. That's where the Fannie Mae Healthy Housing Rewards program came in.
The Healthy Housing Rewards program has two major parts: Enhanced Resident Services and Healthy Design. Paulina chose to focus on the Enhanced Resident Services track, intending to provide health and wellness services as well as work and financial capability support to her tenants.
The property's purchase price and renovation costs amounted to $8 million. In order to facilitate the project, Paulina decided to apply for a Healthy Housing Rewards loan. Considering the potential improvements and impact on the tenants' lives, she was able to secure a loan of $6 million. This represented an LTV ratio of 75%.
Through the program, Paulina was able to provide a variety of services to her tenants, including on-site health screenings, fitness classes, financial literacy training, and career development workshops. As a result of the Enhanced Resident Services certification, Paulina also benefited from a significant interest rate reduction of up to 0.30%.
The property quickly became a beacon in the community, and the project's success underlined the benefits of the Fannie Mae Healthy Housing Rewards program. Paulina's tenants enjoyed enhanced services and a better quality of life, while Paulina was able to facilitate this improvement through favorable financing conditions.
This is a fictional case study provided for illustrative purposes.