Fannie Mae Multi-Family Mortgages

This guide covers Fannie Mae multi-family mortgages. We will discuss how you can purchase commercial properties using Fannie Mae multi-family mortgages. Fannie Mae often approves loans more easily than Freddie Mac. Examples of financing you can do with Fannie Mae and Freddie Mac are senior housing, student housing, and affordable housing. Fannie Mae, formally known as the Federal National Mortgage Association (FNMA), is a government-sponsored enterprise (GSE) in the United States. It was established in 1938 as part of the New Deal to provide liquidity, stability, and affordability to the mortgage market.

Fannie Mae Multi-family Mortgages: A Complete Guide

For over 35 years, Fannie Mae, or the Federal National Mortgage Association (FNMA), has been an important source of liquidity, stability, and affordability in the U.S. housing market’s single-family and multi-family segments. Fannie Mae aids investors, developers, and property owners in obtaining financing for the construction of apartment buildings, affordable housing, senior living facilities, student housing, and manufactured housing communities through its multifamily mortgage programs. This blog focuses on Fannie Mae multifamily mortgages. It discusses their structure and benefits, loan programs, eligibility requirements, and application, providing a guide for mortgage financing investors.

What are Fannie Mae Multi-Family Mortgages?

Fannie Mae Multi-family mortgages are loans aimed at financing the purchase, refinancing, or restoration of multi-family properties such as apartment complexes with a minimum of five units, student and senior housing, and mobile home parks. As a government-sponsored enterprise (GSE), Fannie Mae functions in the secondary mortgage market by buying loans from approved lenders and then bundling and securitizing them as mortgage-backed securities (MBS) to provide liquidity. This process enables the lenders to offer favorable financing to borrowers while lowering their risk under non-recourse loans and other favorable terms.

The Fannie Mae DUS® model fosters multi-family mortgage financing, which has been a dependable funding source for over three decades. With the DUS model, approved lenders can underwrite, close, and service loans on Fannie Mae’s behalf, sharing one-third of the risk, which aligns all lenders, borrowers, and investors. Sponsored DUS model loans enable Fannie Mae to finance well over $55 billion for the multi-family market in 2024 while aiding affordable housing, green initiatives, and critical housing segments.

As a real estate investor, why would you choose Fannie Mae Multi-family Mortgages?

Most real estate investors prefer Fannie Mae multifamily mortgages for the following reasons:

• Non-Recourse Financing: Unlike a bank’s traditional loan, most Fannie Mae multi-family loans do not involve the borrower’s assets.
• Loss of personal assets is only applicable when fraud or violation of specific terms occurs, which mitigates financial risk for investors.
• Competitive Interest Rates: Starting May 21, 2022, Fannie Mae multifamily loans are offered at 5.49% with a remarkable long-term fixed rate of up to 30 years.
• High Loan-to-Value (LTV) Ratios: For most loan programs, Fannie Mae maintains an LTV cap of 90 percent for certain affordable housing loans, often permitting borrowers to capitalize on nearly 70% of the property’s investment value.
• Flexible Loan Terms: Interest-only payment options are further divided into fixed-rate, adjustable-rate, or mixed-adjustable-rate mortgages (ARMs) offered in terms of between five and thirty years.
• These provisions are designed to simplify cash flows and are free from restrictions.
• Support for Affordable Housing: Over 90% of three-quarters of Fannie Mae’s funded apartments are classified as “workforce housing,” affordable to families earning up to 120% of the area median income (AMI).
• Fannie Mae designs special programs that offer lower rates than standard pricing and underwriting exceptions for units with enhanced price restrictions.
• Green Financing Leadership: With Fannie Mae’s green loan policies, including energy- or water-efficient renovations or certified green buildings, she financed over $15.1 billion worth of green loans, classifying her as a forerunner with an unmatched 101% year-over-year increase in green loan production in 2024.
• Assumability: A 1% fee for Fannie Mae multi-family loans makes assumption sales possible, in which the new buyer adheres to the loan terms with the lender’s consensus.

Fannie Mae Multi-Family Mortgages Key Programs

Fannie Mae’s multifamily loan programs offer a range of products for different property categories and borrowers. Here are the most important ones:

Standard DUS Loan

The most utilized option of Fannie Mae multi-family financing is the Standard DUS Loan, which finances the purchase or refinance of stabilized properties with five or more units.

The standout features include the following:

• Loan Size: $5 million ($7 million in some markets).
• Terms: 5 to 30 years, with either fixed or adjustable rates.
• LTV: Up to 80%.
• DSCR: Minimum of 1.25x for fixed-rate loans.
• Use: Conventional apartments, cooperatives, and income-generating properties with up to 35% commercial space (limited to 20% of rental income).

Small Loan Program

The Small Loan Program focuses on businesses with 5–50 units and streamlined processing for loans of between $750,000 and $9 million (with $5 million caps in some markets). It’s perfect for small apartment complexes or investors looking to finance at a reduced cost.

Key features:

• LTV: Up to 80%.
• DSCR: Minimum of 1.25x.
• Advantages: Lower closing costs and fewer third-party reports.

Affordable Housing Loan Program

This program is appropriate for properties with rent limitations, including those with Section 8 Housing Assistance Program (HAP) contracts or Low-Income Housing Tax Credit (LIHTC) properties. These are properties where at least 20% of the units are rented to households earning 50% or less of AMI, or 40% are rented to those earning 60% or less of AMI.

Key features:

• Loan Size: Starts at $750,000–$1 million.
• LTV: Up to 90%.
• DSCR: Minimum of 1.15x for some affordable properties.
• Benefits: Rate discounts and underwriting exceptions for mission-driven properties.

Green Financing Programs

Fannie Mae’s Green Building Certification and Green Rewards programs incentivize energy and water efficiency. Loans are issued for properties with green certifications or those expected to realize a minimum of 30% energy and water savings (with a 15% minimum for energy savings). In 2024, Fannie Mae financed $15.1 billion in green loans.

Seniors Housing Loan Program

This program provides financing for stabilized properties that offer independent living, assisted living, or care for Alzheimer’s/dementia patients. Key features:

• Loan Size: Minimum of $5 million.
• DSCR: 1.30x for independent living, 1.40x for assisted living, or 1.45x for Alzheimer’s/dementia care.
• LTV: Up to 75%.

Student Housing Loan Program

This program is designated for student housing properties where 80% or more of the tenants are undergraduates or graduate students. Its key features include:

• Loan Size: Minimum of $1 million.
• LTV: Up to 75%.
• DSCR: Minimum of 1.30x.

Manufactured Housing Community Loan Program

This program provides financing for mobile home parks and manufactured housing communities, promoting affordable housing. Its key features include:

• Loan Size: Minimum of $1 million.
• LTV: Up to 80%.
• DSCR: Minimum of 1.25x.

Military Housing Loan Program

These loans are structured for properties adjacent to military bases or for those with 20% or more military tenant occupancy. Its key features include:

• Loan Size: Minimum of $1 million.
• LTV: Up to 75%.

Choice Refinance Program

The program streamlines the refinance process for borrowers with existing Fannie Mae multi-family loans by eliminating document requirements, thereby expediting the closing process.

Structured Adjustable Rate Mortgage (SARM)

The SARM loan offers adjustable-rate financing that includes rate lock protection and permits conversion to a fixed-rate loan after a specified duration. Its key features are:

• Loan Size: Minimum of $25 million.
• LTV: Up to 75%.
• DSCR: Minimum of 1.00x at max interest rate.

Eligibility and Underwriting Guidelines

Fannie Mae multifamily loans pay particular attention to eligibility criteria regarding credit quality and risk. Critical criteria are

Property Criteria:

• A multi-family property (or specialized ones like student or senior housing) must be stabilized and have five or more units.
• The property must maintain a minimum occupancy rate of 90% for the past three months.
• Properties must meet certain affordability parameters for housing programs (e.g., 20% of units at 50% of AMI or 40% at 60% of AMI).

Borrower Criteria:

• A minimum credit score of 680 is required, along with no negative credit actions within the previous three years.
• The borrower must possess experience in managing or owning multi-family properties.
• The applicant’s net worth must match or exceed the loan amount.
• Liquidity equals nine to twelve months of debt service after cash inflows.

Financial Metrics:

• Debt Service Coverage Ratio (DSCR): Fixed-rate loans are typically 1.25x but vary by program (1.15x for affordable housing, 1.00x for SARM at max rate).
• Loan to Value (LTV): 80% for most programs, 90% for affordable housing, and 75% for student or military housing.

Additional Factors:

• Under the DUS program, properties with 80% or fewer student or military tenants are acceptable.
• Higher concentrations require specialized programs.
• The DUS program limits commercial space to 35% of the property and 20% of rental income.
• Fannie Mae’s delegated underwriting system permits lenders to confirm borrower and property details.
• However, an agency review has flagged gaps in independent verification as a risk for fraud.
• Fannie Mae experienced financial losses due to loan misrepresentation in 2024 and is currently concentrating on enhancing its fraud detection measures.

Features Of The Loans And Their Terms

Fannie Mae multi-family loans have different terms that cater to diverse investment approaches:

• Amounts of Loans: From $750,000 to $100 million, depending on the program.
• Amortization: A maximum of 30 years.
• Prepayment Penalties: Generally follow a declining step schedule such as 5-4-3-2-1% for five-year terms or 5-5-4-4-3-3-2-2-1-1% for ten years—no prepayment penalties in the last 90 days.
• Payment Schedules: Actual/360 (interest on a day count basis, leading to a larger final payment) or 30/360 (monthly fixed interest).
• Assumability: Loans are assumable for a 1% fee, subject to lender approval.
• Interest options: fixed-rate, adjustable-rate, hybrid ARM, or periods of interest-only payments.

The Process of Application

When applying for a Fannie Mae multifamily mortgage, one must work through a multifamily DUS lender. Below is a full outline of the steps that need to be followed:

Finding a Fannie Mae DUS Lender:

Contact an approved lender. Some top-ranked DUS lenders are JPMorgan Chase, Arbor Realty, and Greystone. The Fannie Mae website also provides a complete listing of lenders.

Check Eligibility:

Ensure the borrower and the property comply with Fannie Mae’s underwriting guidelines. These include the borrower’s credit score, experience, net worth, and occupancy requirements.

Submit Application:

Apply with all required detailed financial documents, property details, and market analysis. Apart from rent rolls, operating statements, and appraisal documents, other documentation may also be required. Under the Small Loan Program, streamlined processing requires less documentation.

Pre-Approval:

The lender assesses the application and issues pre-approval. Some issuers can complete this work in as little as a day.

Due Diligence and Closing:

Complete any necessary third-party reports, such as those on the environment or physical needs. Then, settle on terms, sign the required documents, and submit closing costs. A closing is also a quicker process for refinancing loans.

Loan Servicing:

The DUS lender will service the loan for the entire term, adhering to all aspects of Fannie Mae’s guidelines.

To optimize borrower-lender relationships, StackSource or Bennett Capital Partners offer streamlined services.

Sustainable Initiatives And Affordable Housing Benefits

Fannie Mae’s multifamily programs distinctly emphasize sustainability and affordability in housing. The agency’s financing reached $15.1 billion in green loans and $6.3 billion in affordable housing in 2024, demonstrating their concentrated effort toward mission-aligned lending. Properties with subsidized units or with energy-efficient upgrades enjoy:

• Reduced Rate Discounts: Properties qualifying for affordability or green certifications receive reduced interest rates.
• Underwriting Exceptions: Relaxed affordable housing LTV and DSCR limits.
• Exemption from Loan Purchase Caps: Fannie Mae’s annual loan purchase limit of $73 billion for 2025 does not apply to workforce housing loans (120% AMI).
• This feature feature encourages investment in neglected markets.

Considerations and Associated Risks

Despite the benefits offered by Fannie Mae multifamily loans, there are important considerations:

• Occupancy restrictions capped at 90% are commonplace in volatile markets for these properties.
• Strict Borrower Criteria: Tight credit, experience, and liquidity benchmarks may exclude first-time investors.
• Fraud Risk: Fannie Mae’s assigned underwriting approach to lenders increases the chances of inaccurate information submission during verification.
• The agency is enhancing fraud detection to mitigate this.
• Prepayment Penalties: Losing out on prepayment options can incur significant costs in the event of an early loan discharge.

Recent Developments

• These changes were noticed in 2025 when Fannie Mae implemented changes for title underwriters and agents to improve loan closings. This is part of an ongoing attempt to increase efficiency and reduce the associated risk.
• Moreover, the agency reported steady yet soft fundamentals for the multi-family market in 2024, which was supported by consistent job growth alongside high prices for single-family homes, which tend to keep renters housed.
• Mortgage rates are forecasted to fall to around 6.2% in 2025, which could increase demand for multi-family financing.

Fannie Mae’s Arabic multi-family mortgages are powerful tools for investors looking to acquire, refinance, or rehabilitate multi-family properties. With the brand’s competitive rates, non-recourse financing, high LTV ratios, and other programs designed for different property types, Fannie Mae meets various housing needs, ranging from affordable and sustainable green buildings to affordable and sustainable housing. Investors looking to tap into the multi-family real estate market can do so by partnering with a designated DUS lender and meeting stringent requirements, thus supporting Fannie Mae’s goal of equitable and sustainable housing.

Are you interested in Fannie Mae mortgages? Contact a DUS lender or visit the Fannie Mae website for more information and to begin your investment journey today.

What Is The Role of Fannie Mae

Fannie Mae’s primary mission is to facilitate the flow of mortgage credit by purchasing and securitizing mortgages from lenders, thus making more funds available to borrowers in the form of mortgage loans. Fannie Mae plays a significant role in financing rental properties with multiple units, such as apartment buildings, in the context of multifamily housing. Fannie Mae’s Multifamily division provides various programs and products to make affordable rental housing available to various income groups. These programs help to ensure a stable supply of quality rental housing and support housing affordability for renters.

Fannie Mae Multi-Family Mortgages

It’s important to note that the specifics of Fannie Mae’s multifamily mortgage programs, terms, and offerings can change over time based on market conditions and government policies. Borrowers interested in Fannie Mae multifamily mortgages should contact approved lenders or Fannie Mae directly to get the most up-to-date information and guidance on available options.  We will cover the key features of Fannie Mae’s multifamily housing in the following sections.

Fannie Mae Loan Programs

Fannie Mae offers various loan programs for multifamily properties, such as fixed-rate loans, adjustable-rate loans, and specialty programs tailored to different property types and borrower needs. While Fannie Mae initially purchases loans from lenders, it also provides loan servicing guidelines to ensure consistent management and reporting throughout the life of the loan.

Fannie Mae Multi-Family Mortgages Guidelines on Affordable Housing

Fannie Mae emphasizes supporting affordable rental housing. It offers products specifically to promote affordability for low- and moderate-income renters. Fannie Mae strongly focuses on supporting affordable housing initiatives. Some of its loan programs offer favorable terms for properties that meet certain affordability criteria.

Fannie Mae Multi-Family Mortgages Underwriting Guidelines

Fannie Mae has underwriting guidelines for multifamily loans that consider property income, expenses, market conditions, and borrower qualifications. One of Fannie Mae’s focuses is on the multifamily housing market. Multifamily properties are residential buildings with multiple units, such as apartment buildings or condominiums. Fannie Mae, formally known as the Federal National Mortgage Association (FNMA), is a government-sponsored enterprise (GSE) in the United States. Fannie Mae was established in 1938 to expand the secondary mortgage market by providing liquidity to the mortgage industry. Fannie Mae does its work by purchasing mortgages from lenders, securitizing them, and then selling them to investors as mortgage-backed securities (MBS).

The Role of Fannie Mae Multi-Family Mortgages in Affordable Housing

Fannie Mae offers various loan products and financing solutions for these properties to promote affordable housing and support the rental housing market. Fannie Mae’s multifamily loan programs finance various properties, including affordable housing, market-rate apartments, cooperative housing, senior housing, student housing, and more. Fannie Mae mortgages often have specific terms and requirements tailored to the type of property and its intended use.

Loan Securitization Guidelines of Fannie Mae Multi-Family Mortgages

Some key points about Fannie Mae’s multifamily loans are that it offers a range of loan programs, including fixed-rate loans, adjustable-rate loans, and hybrid loans.  These loans typically have competitive interest rates and terms. Fannie Mae’s underwriting process considers property location, condition, rental income, expenses, borrower creditworthiness, and more. After purchasing multifamily loans from lenders, Fannie Mae packages them into mortgage-backed securities (MBS) sold to investors on the secondary market. This process helps provide liquidity in the mortgage market.

Fannie Mae Green Financing

Fannie Mae also offers financing options for properties that incorporate energy-efficient and environmentally friendly features. These loans often provide better terms for properties that meet specific green standards. The Fannie Mae Green Financing loan program is for properties that incorporate energy-efficient features and are environmentally friendly. Implementing environmentally friendly factors in the multifamily housing sector will earn investors incentives from the Fannie Mae multifamily mortgages Green Financing program.

Risk Sharing with Fannie Mae Multi-Family Mortgages

Fannie Mae sometimes engages in risk-sharing arrangements with lenders, where the risk of default on certain loans is shared between Fannie Mae and the lender. This helps manage risk in the mortgage market. Fannie Mae’s multifamily loan programs cater to properties of varying sizes, from small properties with just a few units to larger apartment complexes.

Fannie Mae Multi-Family Mortgages Market Stabilization

Fannie Mae’s involvement in multifamily housing helps stabilize the market by providing consistent access to capital for property owners and developers.

Tax Credit LIHTC

Often, a nonprofit will get a 5% to 10% higher LTV. The lender can partner with potential borrowers using the lender’s nonprofit and their HUD sponsorship status and will take 25% to 50% of the project. Small balance loans from $1MM to $7MM have an 80% LTV for apartments.

Tax Credit – LIHTC (Low-Income Housing Tax Credit)

LIHTC is a federal program in the United States that provides tax incentives to encourage the development of affordable rental housing for low-income individuals and families. The program offers tax credits to developers of qualified low-income housing projects.

LTV (Loan-to-Value Ratio)

LTV is a financial term used in lending to describe the ratio of a loan to the appraised value of the financed property. It’s commonly used to assess the risk of a loan. A higher LTV indicates that a larger portion of the property’s value is financed through a loan.

The LIHTC program itself does not directly involve loans or financing. It’s a tax credit program in which developers receive tax credits and can sell them to investors to raise funds for affordable housing projects.

These funds help offset development costs and keep rental prices affordable for low-income tenants. LTV, on the other hand, relates to loans and financing. Generally, higher LTVs indicate riskier loans because a larger percentage of the property’s value is financed. However, regarding LIHTC projects, the financing structure is often quite different. Developers might use a combination of tax credits, grants, private equity, and other financing sources to fund their projects. The LIHTC program itself doesn’t determine LTV ratios.

• Multi-Family Seller/Servicer Guides
• SBA HubZone Map
• Small Balance Loans
• SBL Portfolios Term Sheet (freddiemac.com)
• Fixed-Rate Loans (freddiemac.com)