Fannie Mae Multifamily Small Loans
Offered in amounts up to $5 million, Fannie Mae Small Loans have reduced documentation requirements when compared to standard DUS loans. This debt has 5- to 30-year fixed-rate loan terms, with adjustable-rate and hybrid ARM options available.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 Quotes
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)
Very competitive interest rates
Up to 80% LTV allowance
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
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% to 2% typically required (refunded at closing)