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Last updated on Jan 3, 2023
2 min read

Fannie Mae Multifamily Small Loans

Offered in amounts between $750,000 and $5 million, Fannie Mae Small Loans have reduced documentation requirements when compared to standard DUS loans. This debt has 5-30 year fixed-rate loan terms, with adjustable-rate and hybrid ARM options also available.

Better Financing Starts with More Options Start Your Application and Unlock the Power of Choice. Click Here to Get Quotes →$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 Quotes
In this article:
  1. Fannie Mae Multifamily Loans for Apartment Buildings and Developments
  2. Sample Fannie Mae Terms For Small Multifamily Loans in 2023
  3. Advantages
  4. Disadvantages
  5. Get Financing

Fannie Mae Multifamily Loans for Apartment Buildings and Developments

While standard Fannie Mae multifamily loans are incredibly popular among multifamily investors, their $3 million minimum and lengthly documentation requirements means that they might not be the right loan for everyone. Fortunately, Fannie Mae also offers Fannie Mae Small Loans, which have a minimum loan amount of $1 million and a significantly streamlined application process. Just like its larger sibling, Fannie Mae DUS Loans, Fannie Mae Small Loans offer competitive interest rates, are mainly non-recourse, and non-recourse 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 Small Loan term sheet.

Sample Fannie Mae Terms For Small Multifamily Loans in 2023

Size:  $1 million to $6 million

Terms:  5-30 year fixed-rate loan terms available, adjustable-rate and hybrid ARM options also available. Partial and full-term interest-only may also be available. 

Amortization:  Up to 30 years

Maximum LTV:  80%, 75% for refinances 

Minimum DSCR:  1.25x 

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

Prepayment Options:  Yield maintenance or a declining prepayment premium (step-down)

Eligible Properties:  Conventional multifamily properties, Multifamily Affordable Housing (MAH) properties; seniors housing developments, and student housing developments with 5+ units, and manufactured housing communities (MHCs) with 50+ pad sites. 

Eligible Borrowers:  Typically must have a net worth equal to the loan amount and liquid assets equal to 6 months mortgage payments.

Commercial Limits:  Commercial space must be no more than 35% of the project's net rentable area and must contribute no more than 20% of its effective gross income.

Timing:  Loans typically close between 45-60 days after application 

Credit Requirement:  Typically requires a credit score of 680+ (though this may vary by lender) 

Advantages

  • Very competitive interest rates

  • Up to 80% LTV allowance

  • Streamlined processing/documentation

  • Capital improvements may be included in the loan amount

  • Most loans are non-recourse

  • Supplemental loans are allowed after 12 months

  • 30- 180 day rate locks available after commitment (extended rate locks also available)

  • No processing fees (except with written approval)

  • Non-recourse loans are assumable with lender approval and a 1% fee

Disadvantages

  • Requires replacement reserves ($250 per unit minimum)

  • Typically requires 90% physical occupancy for 12-months before closing. This period may be reduced to 90 days under some circumstances.

  • Requires third-party reports including an Appraisal, reduced Physical Needs Assessment and an Environmental Screen

  • Requires a $10,000 application deposit

  • Typically requires between $4,500 and $13,000 in lender fees (including due diligence fees and third-party reports, though this may vary by lender)

  • Rate lock deposit of 1-2% typically required (refunded at closing)

In this article:
  1. Fannie Mae Multifamily Loans for Apartment Buildings and Developments
  2. Sample Fannie Mae Terms For Small Multifamily Loans in 2023
  3. Advantages
  4. Disadvantages
  5. Get Financing

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Multifamily Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

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