Fannie Mae Multifamily Near-Stabilization Execution Loans
Permanent non-recourse debt before the property is full. Fannie funds at 75% physical occupancy at rate lock and underwrites to coverage it deems achievable four months out.
Permanent Debt Before the Property Is Full
Near-Stabilization is Fannie Mae's answer to the most expensive gap in a development timeline. Construction is finished, certificates of occupancy are issued, leasing is underway, and the property is not yet stabilized. The construction loan is still outstanding at a floating rate you no longer want to carry, and conventional permanent debt will not fund until occupancy hits its target.
This execution lets you pay off the construction loan and put non-recourse permanent financing in place before full stabilization. On a large deal in a volatile rate market, moving that refinance forward by six months is worth more than most sponsors expect.
How Far Along Do You Have to Be?
Fannie sets a specific gate. Minimum physical occupancy of 75% at rate lock, and at the commitment date the property must have received certificates of occupancy for 100% of residential units. Loan proceeds are fully disbursed at closing, and MBS additional disclosure is required.
Seventy-five percent is the number to build your leasing schedule around. Not 70%, and not on a pro forma.
| Loan size | $10 million or greater |
|---|---|
| Term | Five, seven, 10, and 12 year options |
| Amortization | Five to 30 years |
| Rate | Fixed and variable options |
| Maximum LTV | Tier compliant. At Tier 2, 75% of as-stabilized value |
| Minimum DSCR | Tier compliant. At Tier 2, underwritten DSCR of 1.25x, or 1.15x for MAH loans |
| Underwritten DSCR definition | Coverage deemed achievable within four months after rate lock, at Fannie Mae's discretion |
| Interest only | Monthly interest-only payments for the first 12 months at the actual rate. An additional interest-only period may be available |
| Occupancy at rate lock | Minimum 75% physical |
| Prepayment | Yield maintenance or declining prepayment premium |
| Rate lock | 30 to 180 day commitments, Streamlined Rate Lock available |
| Recourse | Non-recourse with standard carve-outs for bad acts such as fraud and bankruptcy |
Terms confirmed against the Fannie Mae Near-Stabilization Execution term sheet at multifamily.fanniemae.com/financing-options/conventional-properties/near-stabilization-financing/near-stabilization-execution-term-sheet, fetched July 31, 2026.
What Does "Underwritten DSCR" Actually Mean Here?
It is the most important definition on the page and it is easy to skim past. Fannie underwrites to coverage it deems achievable within four months after rate lock, at its own discretion. You are not being sized on today's trailing numbers, and you are not being sized on your stabilized pro forma either. You are being sized on a four-month forward view that Fannie forms.
Practically, that means your absorption evidence is the underwriting. Signed leases, weekly traffic, concession trends, and the leasing velocity at comparable new deliveries in your submarket carry the file. A sponsor with a documented lease-up track record gets the benefit of the doubt. A first-time developer generally does not, and Fannie names strong borrowers with a demonstrated lease-up record in its eligibility criteria.
Who Qualifies
Conventional and Multifamily Affordable Housing properties, partially leased and either newly constructed or recently renovated, in markets Fannie classifies as Strong or Nationwide. The $10 million floor rules out most small deals, which puts this squarely in institutional and mid-market development territory.
The MAH coverage relief is notable. At Tier 2, an affordable deal underwrites at 1.15x against 1.25x conventional, which is a real proceeds difference on the same lease-up.
What Does the First Year of Interest Only Buy You?
Cash flow exactly when the property does not have any. Twelve months of interest-only payments at the actual rate carries you from 75% occupancy through stabilization without an amortizing payment competing with concessions and marketing spend. An additional interest-only period may be available, which is worth asking about before you finalize your sources and uses.
The Alternative Paths
If you are below the 75% threshold or under $10 million, this is not available yet. The usual routes are a construction loan extension, a bridge loan to stabilization, or a forward commitment arranged before construction started.
Once the property does stabilize, the standard Fannie Mae fixed-rate loan is the destination. On the affordable side, compare against Fannie's affordable menu, where forward commitments handle the construction phase directly.
What Should You Bring?
A current rent roll with lease start dates, weekly leasing and traffic reports going back to first move-in, the certificate of occupancy file, the as-stabilized appraisal, and your track record on prior lease-ups. Model the deal at the coverage Fannie is likely to underwrite rather than at stabilization: our DSCR calculator will show you the gap.
Send us the leasing velocity and the construction loan maturity. We will tell you whether you are close enough to lock.
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