Fannie Mae Standard FHA Risk Sharing Execution
Fannie Mae's standard FHA risk-sharing execution can help reduce loan pricing while maintaining the efficiency of the traditional Fannie Mae borrowing process.
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When it comes to financing Multifamily Affordable Housing (MAH) properties with Fannie Mae loans, investors have a lot of options. However, if they want to save the most money, they might want to consider using Fannie Mae's Standard FHA Risk Sharing Execution, which can help reduce loan pricing while maintaining the efficiency of the traditional Fannie Mae borrowing process.
Fannie Mae's Standard FHA Risk Sharing Execution provides a variety of flexible options — and with loan terms of between 15 and 40 years and LTV allowances of up to 90% "as stabilized," this program is flexible (and generous) enough to help a wide variety of multifamily borrowers gain a financial edge.
Sample Fannie Mae Terms For FHA Risk Sharing Execution in 2023
Size: No set minimum or maximum, but loans over $50 million require HUD approval
Terms: 15 to 40 years
Amortization: Up to 40 years, 30 years for balloon loans
Interest Rates: Fixed-rate only
Maximum LTV: Up to 80% for existing properties, up to 90% for to-be-built properties "as stabilized"
Minimum DSCR: 1.15x for existing properties- 1.20x for to-be-built properties "as stabilized"
Recourse: Loans are non-recourse with standard “bad boy” carve-outs
Prepayment Penalty: Flexible prepayment options available
Eligible Properties:
Multifamily Affordable Housing (MAH) properties with rent/income restrictions
Rent/income restrictions must remain for the entire term of the loan
Advantages:
Lower pricing than traditional Fannie Mae loans
Loans are non-recourse
30-180 day rate locks available
Loans are assumable (with lender approval)
Disadvantages:
Requires third-party reports including a property condition assessment and a Phase I Environmental Assessment
Requires replacement reserves
HUD subsidy layering reviews may be required in some situations (including certain LIHTC transactions, properties with HAP Section 8 contracts, and properties using soft debt via state and local HOME funds)