Fannie Mae Moderate Rehabilitation Financing for Multifamily Developments

Fannie Mae Insured Moderate Rehabilitation Loans for Apartment Buildings and Multifamily Properties 

If you're a developer or investor who currently owns (or wants to purchase) a property that needs a moderate amount of renovations, a Fannie Mae Moderate Rehabilitation Loan could be the loan product you've been looking for. Fannie Mae Moderate Rehabilitation Loans have terms of between 5 and 30 years, and flexible amortizations of up to 30 years, and, they even allow supplemental financing through Fannie Mae's Moderate Rehabilitation Supplemental Loan program. Plus, these loans have an LTV allowance up to 80%, are non-recourse, and are fully assumable with lender approval. 

Sample Fannie Mae Terms For Moderate Rehabilitation Loans

Size:  $10 million+ 

Use:  Acquisition or refinancing of conventional multifamily properties with at least $10,000 of planned improvements per unit

Terms:  5, 7, 10, and 15-year balloon loans available, 20, 25, and 30-year fully amortizing loans

Amortization:  Up to 30 years, interest-only loans are available 

Interest Rates:  Fixed and adjustable-rate loans available. Fixed-rate loans are based off associated Treasury Bill, while adjustable-rate loans are based off the 30 or 90-day LIBOR rate. 

Maximum LTV 

Up to 80% of the lesser of the property's: 

  • Stabilized appraised value

  • Purchase price (if purchased in the last 12 months) + value add during renovation + 3% closing costs

Minimum DSCR 1.25x 

Recourse:  Loans are non-recourse with standard “bad boy” carve-outs 

Rehab Requirements: Property improvements must average at least $10,000/unit 

Timing:  Borrower will typically receive a commitment 45 to 60 days after initial application; third-party report timing and borrower due diligence submission may speed up or slow down the process

Eligible Borrowers:  Borrowers must typically be U.S.-based single asset entities

Prepayment:  Options include yield maintenance, defeasance, and declining prepayment premiums

Origination Fees: 

  • 1% of the loan amount for loans $9 million or less

  • 0.8% of the loan amount or $90,000 (whichever is greater) for loans more than $9 million

  • Origination fees typically continue to decrease as loans become larger

Assumability:  Loans are fully assumable with lender approval and 1% fee. May also require an additional fee paid to the lender (usually around $3,000) 

Other Considerations:  

  • Borrowers must sign a Completion Repair Guaranty covering the entire scope of the required rehabilitation work

  • If repairs for the project are more than or equal to $20,000/unit, a Rehabilitation Work Evaluation Report is required

  • Borrowers must submit a Rehabilitation Work Schedule detailing the scope of the planned work, including costs, dates, and allowances for potential cost overruns

  • Borrowers must also create and submit a budget for the planned work, and place funds into a Rehabilitation Reserve Account


  • Competitive interest rates

  • Loans are non-recourse

  • Lower cost than refinancing

  • Not subjected to Fannie Mae's "one supplemental loan" rule

  • Loans are fully assumable (with approval and fees)


  • Requires third-party reports including a Property Condition Assessment, Appraisal, and Phase I Environmental Assessment

  • $25,000 application fee typically required (includes third-party reports and underwriting costs)

  • $15,000- $20,000 in legal fees also typically required

  • Rate locks only available after commitment

  • Origination fees required