Multi-Family Properties: 5 Units or More
Multifamily properties with 5 or more units are considered commercial properties. This means that 5-unit multifamily financing options are significantly different than the loan options available for 1-4 unit properties.
While 5+ unit multifamily financing options aren’t available for 1-4 unit properties, there are also several loan types available for 1-4 properties that aren’t available for larger apartment buildings.
Non-QM loans for multifamily properties are, by far, the easiest loans to qualify for. Non-QM loans are ideal for newer investors, those with more serious credit or legal issues, or investors looking to rehabilitate a highly distressed property.
Loan Scenario:
– Size: $100k to $5 million+
– Terms: 5-30 years
– Maximum LTV: 75%-85%
– DSCR: 1.20x+ required, as low as 1.00x for affordable properties
– Term: Up to 30 years
– Amortization: Up to 30 years
– Interest Rates: Fixed and variable rates available, interest-only (I/O) options available
Fannie Mae multifamily loans are a great option for well-qualified borrowers with a high net worth, a good amount of investing experience, and good credit. They offer some of the lowest rates and longest terms in the industry, as well as particularly high leverage (up to 80% LTV for qualified borrowers) and DSCRs as low as 1.20x. Fannie Mae apartment loans can also be ideal for smaller-scale investors, as their Fannie Mae Small Loan program starts at only $750,000. Like CMBS, Fannie Mae multifamily loans are non-recourse, but unlike CMBS, they only finance multifamily apartments, senior living facilities, and mobile home parks.
Loan Scenario:
– Size: $1 million to $100 million+
– Terms: 5-30 years
– Maximum LTV: 75%-80%
– DSCR: 1.20x+ required, as low as 1.00x for affordable properties
– Term: Up to 30 years
– Amortization: Up to 30 years
– Interest Rates: Fixed and variable rates available, interest-only (I/O) options available
Freddie Mac multifamily loans are quite similar to Fannie Mae’s apartment loan programs. Like Fannie Mae multifamily loans, Freddie Mac’s apartment loan programs are fully non-recourse with bad boy carve-outs.
Loan Scenario:
– Size: $1 million to $100 million+
– Terms: 5-30 years
– Maximum LTV: 75%-80%
– DSCR: 1.20x+ required, as low as 1.00x for affordable properties
– Term: Up to 25 years
– Amortization: Up to 30 years
– Interest Rates: Fixed and variable rates available, interest-only (I/O) options available
