Fannie Mae Multifamily Financing for Senior Housing Developments 

With more than 10,000 Americans turning 65 every single day, it has never been a better time to invest in the senior housing industry. If you're an experienced investor or developer interested in purchasing a senior housing project, a Fannie Mae Seniors Housing Loan might be the perfect fit. Fannie Mae Seniors Housing Loans have terms and amortizations up to 30 years, fixed and adjustable-rate interest options, and can be used to acquire or refinance independent living, assisted living, and Alzheimer's/Dementia Care facilities. Fannie Mae Seniors Housing Loans have a minimum loan amount of $5 million, allow LTVs of up to 80%, and are assumable (with a 1% fee and approval from both Fannie Mae and the lender.) 

Keep reading below to learn more, or click here to download our easy-to-read Fannie Mae Seniors Housing Loan term sheet.

Sample Fannie Mae Terms For Seniors Housing Loans in 2023

Size:  $5 million minimum (exceptions can be made on an individual basis)  

Terms:  5-30 years

Use:  Acquisitions or refinances

Amortization:  Up to 30 years

Interest Rates:  Fixed and adjustable-rate loans available 

Maximum LTV: 

• 75% (80% for fixed-rate, tax exempt bonds)

• 70% for Alzheimer's/Dementia Care properties

• 70% for properties with a Skilled Nursing component

• Decrease max. LTV by 5% for cash-out refinances

Minimum DSCR:  

• 1.30x for Independent Living only

• 1.40x for 100% Assisted Living properties

• 1.45x for 100% Alzheimer's/Dementia Care properties

• 1.50x for properties with a Skilled Nursing component

• Weighted average calculation for properties with less than 50% Alzheimer's/Dementia Care units

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

Prepayment Options: Yield maintenance, defeasance, or graduated prepayment premiums

Commercial Space Limits: Commercial space must comprise no more than 10% of the net rentable area and produce no more than 10% of the project's effective gross income

Eligible Properties: 

• Properties must have between 5 and 50 units

• Properties must be stabilized and can include manufactured housing communities

• For acquisitions or refinances, loans must be first lien

• Eligible borrowers must be single asset entities

• No properties with entrance fees are allowed

• Owner/operators must have at least 5 years of successful experience in senior living communities and must have owned/managed 5 or more senior housing properties

Advantages of Fannie Mae Seniors Housing Loans

• Competitive interest rates

• Most loans are non-recourse

• Flexible prepayment options

• Supplemental financing is allowed

• 30- 90 day rate locks available (early and extended rate locks are also available-- early rate locks allow borrowers to lock the rate between 45 and 365 days before closing)

Disadvantages of Fannie Mae Seniors Housing Financing

• Requires third-party reports including an Appraisal, Property Condition Assessment, Zoning, Termite, Flood, and Seismic reports (for properties in specific areas), a Phase I Environmental Assessment, and a Seniors Housing Liability Assessment Report

• Replacement reserves are required ($300/unit per year)

• Typically requires 90% economic occupancy for 12 months (for Independent Living facilities) or 15 months (for Alzheimer's/Dementia Care or Skilled Nursing properties), though this may vary

• Typically requires $15,000 application deposit and $3,000 non-refundable processing fee

• Typically requires a 1% origination fee

• A 2% rate lock fee is required (refundable at closing)

• Commitment fees may also be charged