Fannie Mae Rural Development Guaranteed Rural Rental Housing Program
Fannie Mae's Rural Rental Housing Program offers some astonishingly competitive terms, with LTVs as high as 97% in select cases.
Fannie Mae Loans for Rural Multifamily Properties
Building, buying, or renovating a rural multifamily property isn't for everyone-- but for investors who are serious about rural development, the Fannie Mae Rural Development Guaranteed Rural Rental Housing Program offers some pretty incredible terms. The program, which is offered by the United States Department of Agriculture (UDSA) Office of Rural Development's (RD's) Section 538 program, offers fixed-rate loans with terms between 25 and 40 years. Plus, the program offers LTV allowances of up to 90% for for-profit organizations, and up to 97% for non-profit organizations.
Sample Fannie Mae Terms for Rural Development Guaranteed Rural Rental Housing Loans in 2023
Size: Varies
Terms: 25-40 years
Amortization: 25-40 years (both fully amortizing loans and balloon loans allowed)
Interest Rate: Fixed-rate only
Maximum LTV: 90%, up to 97% for non-profits with Fannie Mae approval
Minimum DSCR: 1.15x
Recourse: Loans are recourse, except for the portion of the loan covered by the USDA Office of Rural Development's (RD's) 90% guaranty
Eligible Properties:
Lenders must be approved by the USDA RD and Fannie Mae
Property transactions with rent subsidies allowed
For properties undergoing rehabilitation, a minimum of $6,500 per unit is required
Rent must be restricted to 30% of the area median income (AMI), adjusted for family size
Advantages:
Fast underwriting/approval process
Flexible amortizations
Competitive interest rates
90% USDA guaranty
Disadvantages:
Loans are partially recourse
Only available in rural areas