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Updated 3 months ago, 10/04/2024
Freddie Mac SBL & Fannie Mae Small Loan Financing - Multifamily Apartments
In light of the recent 50bps rate cut, we're starting to see an uptick in requests for Freddie Mac SBL and Fannie Small Loan multifamily loan quotes. Given the recent pickup in activity, I thought this would be a good time to re-hash the agencies' small balance multifamily loan programs for future reference.
In short, Freddie Mac & Fannie Mae offer 70-80% LTV, 1.20-1.25x DCR, 30-year amortization, 5-30 year term, partial-full term IO, non-recourse permanent financing for owners of multifamily apartment buildings throughout the United States. Rates currently range from the high 4.00% - mid 5.00%'s depending on the asset / borrower / location.
Freddie Mac & Fannie Mae multifamily loans essentially offer low rate, high leverage, non-recourse permanent financing options that are backed by the full faith and credit of the United States government. They're like bank & credit union loans... but with (i) more leverage, (ii) more interest only, (iii) [typically] lower rates, (iv) non-recourse structure, and (v) no deposit requirements / no requirement to start "a relationship".
Minimum loan size is $1,000,000. Cash out refinances are acceptable within reason. Borrowers need to have 9 Months' P&I worth of liquidity (cash / stocks / bonds / crypto / etc), and 100% net worth relative to the loan amount. Retirement accounts don't count towards liquidity, nor do non-liquid investments like VC, etc.
Berkadia is #1 Freddie Mac Optigo, #2 Fannie Mae DUS , and #1 HUD/FHA multifamily lender in the country with 50+ life company correspondent lending relationships. We also broker multifamily loans to banks, credit unions, CMBS, debt funds, and private lenders. Next time you're in the market for multifamily financing (or generally speaking, want to learn more about different multifamily loan programs available to you), feel free to reach out for guidance.
FREDDIE MAC SMALL BALANCE LOAN (SBL)
Loan Purpose: Permanent Financing (Refi & Acquisition)
Loan Proceeds: $1,000,000 - $7,500,000
Loan Sizing: 80% LTV; 1.20x DCR (Top Market)
Loan Sizing: 80% LTV; 1.25x DCR (Standard Market)
Loan Sizing: 70-75% LTV; 1.30x DCR (Small Market)
Loan Sizing: 70-75% LTV; 1.40x DCR (Very Small Market)
Amortization: 30 Years
Loan Term: 5-10 Year Term (Fixed), 10 or 20 Years (Hybrid ARM)
IO Term: Partial Term IO (80% LTV; 1.20x DCR); Full Term IO (65% LTV; 1.35x DCR) (Top Market)
IO Term: Partial Term IO (80% LTV; 1.25x DCR); Full Term IO (65% LTV; 1.40x DCR) (Standard Market)
IO Term: Partial Term IO (70-75% LTV; 1.30x DCR); Full Term IO (60% LTV; 1.45x DCR) (Small MArket)
IO Term: Partial Term IO (70-75% LTV; 1.40x DCR); Full Term IO (60% LTV; 1.55x DCR) (Very Small Market)
Rate Types: Fixed & Hybrid ARM
Rate Lock: Rate Lock @ Application
Non-Recourse: Non-Recourse w/ “Bad Boy” Carveouts
Prepayment: Standard - Greater of YM or 1.00%
Flexible Prepay: Flexible Options – Stepdown & Extended Open/Par Periods
Rate Buydowns: Yes – Rate Buydowns Available Up to 2.00%
Assumable: Yes – Assumable Loan
Cash Out Refi: Yes – Cash Out Refi OK
FANNIE MAE SMALL LOAN
Loan Purpose: Permanent Financing (Refi & Acquisition)
Loan Proceeds: $1,000,000 - $9,000,000
Loan Sizing: 75-80% LTV; 1.25x DCR
Amortization: 30 Years
Loan Term: 5-30 Year Term
IO Term (PTIO): Partial Term IO @ 80% LTV; 1.25x DCR
IO Term (FTIO): Full Term IO @ 65% LTV; 1.35x DCR
Rate Type: Fixed Rate
Rate Lock: Rate Lock @ Loan Commitment
Rate Structure: Treasury Yield + Spread
Non-Recourse: Non-Recourse w/ “Bad Boy” Carveouts
Prepayment: Yield Maintenance; 3 Mos @ 1.00%; 3 Mos @ Par
Flexible Prepay: Flexible Prepayment Options Available
Escrows: Taxes, Insurance, Replacement Reserves
Rate Buydowns: Yes - Rate Buydowns Available Up to (1.25%-2.00%)
Assumable: Yes – Assumable Loan
Cash Out Refi: Yes – Cash Out Refi OK