Fannie Mae Multifamily Hybrid ARM Loans
Fannie Mae Hybrid ARM Loans have an LTV allowance up to 80%, are non-recourse, and are fully assumable
Better Financing Starts with More Options$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get QuotesFannie Mae Hybrid ARM Financing for Multifamily Developments
Borrowers looking for hybrid ARM financing for multifamily developments don't have to look beyond Fannie Mae's Hybrid ARM Loan for the funding they need. Fannie Mae Hybrid ARM Loans have five-, seven-, and 10-year fixed-rate period options, after which the loan converts to an adjustable interest rate based on the 30-day average SOFR rate. Fannie Mae Hybrid ARM Loans have an LTV allowance up to 80%, are non-recourse, and are fully assumable (with lender approval.)
To learn more, check out our official Fannie Mae Hybrid Adjustable-Rate Mortgage Product Sheet or keep reading below for an in-depth explanation of Fannie Mae’s Hybrid ARM financing program.
Sample Fannie Mae Terms for Hybrid ARM Multifamily Loans in 2023
Size: Varies, though typically $6 million maximum (with a lower maximum in smaller markets)
Terms: 30 years, with a 5, 7, or 10-year fixed rate term, which then converts to an adjustable-rate for the rest of the loan
Amortization: Up to 30 years
Interest Rates: Adjustable rate term based on the 30-day average SOFR rate
Interest Rate Cap: Adjustable interest rate cannot exceed the initial interest rate by more than 5%, rate cannot be adjusted more than 1% up or down during each adjustment period
Maximum LTV: Up to 80%
Minimum DSCR: 1.25x (may vary based on market location)
Recourse: Loans are non-recourse with standard “bad boy” carve-outs
Prepayment Options: Yield maintenance or declining prepayment premiums during fixed-rate term, no prepayment fees during the adjustable-rate term
Eligible Properties:
Properties must have between 5 and 50 units
Properties must be stabilized, and can include manufactured housing communities
For acquisitions or refinances, loans must be first lien
Advantages:
Competitive interest rates
Less fees than comparable Fannie Mae loans
Loans are non-recourse
Flexible prepayment options
30- 180 day rate locks available (streamlined and early rate locks also available)
Disadvantages:
Requires third-party reports including a property appraisal, property condition assessment, and a Phase I Environmental Assessment
Replacement reserves are required
Supplemental financing is not available