Agency Multifamily Loans

Agency Financing for Stabilized Apartment Properties

INSIGNIA Financial Services arranges Fannie Mae and Freddie Mac financing for stabilized apartment properties of five or more units, including conventional, affordable, workforce, seniors, student and manufactured housing communities. Loans are originated by approved agency lenders, and each request is matched to the program and lender best suited to its size, leverage, term and prepayment requirements.

Agency debt offers long terms and non-recourse structures for stabilized apartment properties, but it is not a single product. Loan size floors, leverage, interest-only availability and prepayment structure differ between the two agencies and between programs within each, and the right choice depends on the property, the sponsor and the business plan.

Agency Programs at a Glance

Leverage shown is the maximum under each term sheet. Proceeds are typically sized to the most restrictive of the leverage, coverage and refinance tests. All of these programs are non-recourse except for standard carve-outs for acts such as fraud and bankruptcy. Freddie Mac waives its refinance test when amortizing DCR is at least 1.40x and LTV is 60% or less.

Choosing Between Fannie Mae and Freddie Mac

Loan size and property type

Freddie Mac's fixed-rate and floating-rate programs start at $10 million. Below that, Freddie Mac Conventional Small generally covers $2 million to $10 million for predominantly market-rate properties of 5 to 50 units, and Fannie Mae's Small Mortgage Loan program covers loans up to $9 million. The Fannie Mae DUS term sheet states no minimum, and individual DUS lenders set their own floors. Student, seniors and manufactured housing loans are excluded from Freddie Mac Conventional Small and are handled under separate Freddie Mac term sheets or the Fannie Mae programs.

Term and structure

Fannie Mae offers terms of 5 to 30 years with fixed and variable rate options. Freddie Mac fixed-rate loans run 5 to 10 years, or up to 30 years when the loan is not purchased for securitization, and Conventional Small loans are offered at 5, 7, 10, 12 or 15 years. Freddie Mac floating-rate loans run 5, 7 or 10 years and are priced over 30-day average SOFR. Freddie Mac permits partial-term and full-term interest-only at lower leverage than amortizing structures.

Prepayment

Fannie Mae offers yield maintenance and declining prepayment premium structures. Freddie Mac's standard fixed-rate structure is yield maintenance until securitization, followed by a two-year lock-out and then defeasance, with no premium in the final 90 days. On Conventional Small loans, step-down premiums and yield maintenance without defeasance are available at additional cost, and Freddie Mac floating-rate loans offer four lock-out and prepayment schedules with premiums that step down over the term. Prepayment flexibility has a direct cost in pricing, so we model the alternatives against the sponsor's expected hold period.

Rate lock

Fannie Mae commitments run 30 to 180 days, with a Streamlined Rate Lock option. Freddie Mac offers early rate-lock options typically ranging from 60 to 120 days until purchase, an Index Lock that fixes the Treasury component of the coupon, and, on Conventional Small, a spread lock for 60 days after application.

Where a property qualifies under both agencies, INSIGNIA obtains quotes under each and compares them on proceeds, term, prepayment structure and total cost, not coupon alone.

How Agency Loans Are Sized and Underwritten

• Leverage. Maximum LTV is 80% on the Fannie Mae Small Mortgage Loan and on Freddie Mac loans with terms of seven years or longer, with lower limits for shorter terms and for interest-only structures. Fannie Mae DUS leverage varies by asset class and product.
• Coverage. The minimum is 1.25x on the Fannie Mae Small Mortgage Loan and on Freddie Mac programs, and varies by asset class and product on Fannie Mae DUS loans. Freddie Mac calculates coverage on an amortizing payment even where the loan is interest-only. Our DSCR calculator and loan calculators test a structure against these limits, and our article on loan sizing explains how the constraints interact with debt yield.
• Occupancy. Fannie Mae requires stabilized occupancy, typically 90% for 90 days before funding, and considers pre-stabilized properties case by case.
• Borrower. A creditworthy single-asset borrower, typically a single purpose entity. Fannie Mae permits indirect foreign ownership interests subject to proper structuring.
• Reports and reserves. An appraisal, Phase I environmental assessment and property condition assessment are standard on DUS loans, with streamlined reports on Fannie Mae small loans. Tax, insurance and replacement reserve escrows are generally required.

How Agency Loans Are Priced

Agency pricing is a spread over a benchmark index, typically Treasury yields for fixed-rate loans and SOFR for floating-rate loans, plus lender and agency components set at quote. INSIGNIA does not post loan rates because pricing moves with the benchmark, the program, the property and the sponsor. Current benchmark levels are published on our interest rates page, and the timing of a rate lock is one of the structuring decisions we review with each sponsor.

Property Types and Specialty Programs

• Conventional multifamily. Market-rate properties of five or more units. Freddie Mac supports eligible mixed-use properties under its conventional programs.
• Affordable and workforce housing. Fannie Mae offers affordable housing preservation financing, and its Sponsor-Dedicated Workforce and Sponsor-Initiated Affordability initiatives incentivize borrowers who restrict rents on at least 20% of units at or below 120% of area median income. Freddie Mac Targeted Affordable Housing covers preservation, tax-exempt and taxable executions, including LIHTC bond credit enhancement and Section 8 financing.
• Seniors housing. Fannie Mae finances stabilized properties providing independent living, assisted living or memory care, and Freddie Mac offers a separate Seniors Housing Loan. INSIGNIA arranges agency seniors housing loans; see our assisted living and healthcare financing page. Skilled nursing facilities are generally financed through HUD programs, covered on our HUD/FHA 223(f) and 232 page.
• Student housing. Fannie Mae defines these as properties where more than 40% of units are leased to undergraduate or graduate students, and Freddie Mac offers a Student Housing Loan.
• Manufactured housing communities. Fannie Mae requires a minimum of 50 pad sites, and Freddie Mac offers loans for both investor-owned and resident-owned communities.

When Agency Financing Is Not the Best Fit

Agency execution depends on stabilization, property type and loan size. The following situations usually point to a different source of capital.

• Lease-up, repositioning or heavy value-add. Both agencies have limited pre-stabilization executions, but these properties are usually better served by bridge loans followed by an agency take-out once the property stabilizes.
• Smaller balances or assets outside agency criteria. Our non-agency apartment loans cover sub-institutional financing outside the agencies.
• Long-term, fully amortizing government-insured debt. See HUD/FHA 223(f) and 232 loans.
• Ground-up development. See ground-up construction loans.
• Balance sheet or conduit alternatives. Bank loans, credit union loans and CMBS conduit loans trade different recourse, flexibility and execution characteristics.

For a side-by-side view of every program we arrange, see loan programs at a glance, and for the broader multifamily picture see multifamily finance and capital sources and loan types. Closed financings across property types appear under representative transactions.

How INSIGNIA Arranges Agency Loans

INSIGNIA is an independent advisor and is not affiliated with Fannie Mae or Freddie Mac. Agency loans are originated and funded through approved Fannie Mae DUS lenders and Freddie Mac Optigo lenders, and our role is to structure the request, select the right lenders and manage the process to closing.

1. Scenario review. Property, sponsor, business plan, target proceeds and expected hold period.
2. Program and lender selection. Matching the loan to the Fannie Mae and Freddie Mac programs and approved lenders most likely to execute.
3. Quotes and structure. Comparing proceeds, term, interest-only, prepayment, rate lock and total cost.
4. Application and underwriting. Third-party reports, lender diligence and agency approval.
5. Commitment and closing. Coordinating title, legal, escrows and funding.

Information Needed for a Quote

• Property address, unit count and unit mix
• Current rent roll and occupancy history
• Trailing 12-month operating statement and the prior two years of operating statements
• Loan purpose, target proceeds, preferred term and expected hold period
• For a refinance, the existing loan balance, maturity and prepayment terms; for an acquisition, the purchase contract
• Sponsor financial statement, real estate schedule and ownership structure

Frequently Asked Questions

What is the minimum loan size for an agency multifamily loan?

It depends on the program. Freddie Mac Conventional Small generally covers $2 million to $10 million, and Freddie Mac fixed-rate and floating-rate loans have a $10 million minimum. Fannie Mae's Small Mortgage Loan program covers loans up to $9 million, and the DUS term sheet states no minimum, though individual DUS lenders set their own floors. Loans below these levels are usually placed with non-agency lenders.

How much leverage do agency lenders provide?

Up to 80% LTV on the Fannie Mae Small Mortgage Loan and on Freddie Mac loans with terms of seven years or longer, with a 1.25x minimum coverage ratio. Freddie Mac limits leverage to 75% on terms under seven years and to 65% to 70% on full-term interest-only loans. Fannie Mae DUS leverage varies by asset class and product, and affordable, seniors and student housing are underwritten to their own parameters.

Are agency multifamily loans recourse?

Both agencies offer non-recourse execution with standard carve-outs for acts such as fraud and bankruptcy. The borrower is typically a single purpose entity, and a guarantor is generally expected to stand behind those carve-outs.

What occupancy is required?

Fannie Mae requires stabilized occupancy, typically 90% for 90 days before funding, and reviews pre-stabilized properties case by case. Fannie Mae also offers a near-stabilization execution for newly built or recently renovated properties with partial stabilization, and Freddie Mac offers lease-up and value-add executions. Properties further from stabilization are usually bridged first.

How do prepayment terms work on agency loans?

Fannie Mae offers yield maintenance and declining prepayment premium options. Freddie Mac's standard fixed-rate structure is yield maintenance until securitization, then a two-year lock-out followed by defeasance, with no premium in the final 90 days. The cost of added flexibility is reflected in pricing, so the right structure depends on how long the sponsor expects to hold the property.

Can an agency loan be assumed by a buyer?

Fannie Mae non-recourse loans are typically assumable, subject to review and approval of the new borrower's financial capacity and experience. Assumption provisions for any specific loan are set in the loan documents and should be reviewed before commitment.

How long does an agency loan take to close?

Timing depends on the lender, the third-party reports and the rate lock selected. Fannie Mae commitments run 30 to 180 days, and Freddie Mac early rate-lock options typically run 60 to 120 days. An appraisal, Phase I environmental assessment and property condition assessment are standard on DUS loans. An advisor will give a timeline estimate for your property at the scenario review.

Which states does INSIGNIA serve?

INSIGNIA arranges financing nationwide except in Alaska, Arizona, Maine, Minnesota, Nebraska, Nevada, North Dakota, South Dakota and Vermont. Programs may not be available in all jurisdictions.

What if my property does not qualify for agency financing?

Bridge, non-agency, HUD, bank, credit union and CMBS conduit financing each cover situations the agencies do not. We review the alternatives as part of the scenario review so the request is positioned with the lenders most likely to execute.

Program parameters are summarized from the published Fannie Mae term sheets and the Freddie Mac conventional and targeted affordable housing term sheets, and are subject to change without notice. Actual terms depend on the property, sponsor, lender and market conditions, and this page is not an offer of financing or a statement of current pricing. All loans are subject to credit approval.