Fannie Mae Multifamily Loan

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on September 02, 2023

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What Is Fannie Mae Multifamily Loan?

The Fannie Mae Multifamily Loan is a specialized financial solution crafted to support real estate investors and developers in the multifamily housing sector.

Operating under Fannie Mae's Delegated Underwriting and Servicing (DUS) program, this loan is tailored to the unique needs of multifamily property owners.

Rather than a one-size-fits-all approach, it offers a suite of products catering to various property types, from traditional apartments to senior residences and student housing.

The loan boasts competitive interest rates, flexible terms, and often non-recourse structures, making it a sought-after choice for many in the real estate industry.

Whether you're aiming to purchase, refinance, or rehabilitate multifamily properties, the Fannie Mae Multifamily Loan serves as a reliable financing cornerstone.

Process of Fannie Mae Multifamily Loan


The journey begins with the borrower submitting a detailed application to a DUS lender, elaborating on the property's specifics and financial position.


After thorough vetting, the DUS lender gives a preliminary nod, setting the stage for further scrutiny.

Due Diligence

At this juncture, an intensive examination of the property's physical and financial aspects occurs. Expect property inspections, appraisals, and market analyses.


With due diligence cleared, loan documents are drafted and agreed upon, and the loan is finally disbursed.

Overview of the Loan Process

Eligible Properties and Requirements

Types of Multifamily Properties

Eligibility encompasses a diverse range of properties, from traditional apartments to targeted housing like senior or student residences.

Minimum Occupancy Rates

A stipulated occupancy rate, generally above 85%, ensures the viability of the investment.

Loan Term and Amount

Loans can range from short-term (5-10 years) to long-term (up to 30 years), with amounts varying based on property type and borrower qualification.

Eligible Properties and Requirements

Types of Fannie Mae Multifamily Loan Products

Small Loans

Targeted at smaller properties, these loans typically cater to projects requiring less substantial amounts.

Affordable Housing

This variant addresses properties offering reduced rents to low-income households.

Seniors Housing

Tailored for properties housing senior citizens, ensuring they have safe and accessible living spaces.

Manufactured Housing Communities

These loans cater to properties hosting manufactured homes, ensuring affordability without compromising on quality.

Student Housing

Focused on properties near educational institutions, catering to the unique needs of student populations.

Green Financing

For property owners keen on enhancing energy efficiency or those owning green-certified buildings, this loan type provides incentives.

Types of Fannie Mae Multifamily Loan Products

Benefits of Fannie Mae Multifamily Loan

Competitive Interest Rates

Due to government backing, borrowers can often avail of interest rates lower than traditional financing avenues.

Flexible Terms

A range of loan terms ensures that borrowers can choose a structure aligning with their financial strategy.

Non-recourse Loan Structure

A standout feature is a non-recourse structure means borrowers aren't personally liable should defaults occur. The property itself acts as collateral.

Ability to Refinance

Borrowers can refinance their loans, capturing lower interest rates or drawing equity from their property's appreciation.

Supports Various Multifamily Property Types

Its broad acceptance criterion ensures diverse property types, from student housing to senior residences, find financial backing.

Drawbacks of Fannie Mae Multifamily Loan

Strict Eligibility Criteria

Given the magnitude of funds and the government's involvement, the eligibility bar is set high, sometimes sidelining smaller investors.

Prepayment Penalties

Paying off loans early might attract penalties, discouraging borrowers from wrapping up their debts ahead of schedule.

Requires Third-Party Reports

Borrowers need to furnish third-party reports like appraisals and property inspections, which can be time-consuming and expensive.

Limitations on Loan Assumption

Not every Fannie Mae Multifamily Loan can be assumed by another party. There are restrictions that can hinder property sale prospects.

Benefits and Drawbacks of Fannie Mae Multifamily Loan

Financing Structures and Features

Fixed-rate vs Variable-rate Loans

Borrowers can pick between loans with steady interest rates (fixed rate) or those that change based on market dynamics (variable rate).

Interest-Only Payment Options

Some loans offer an initial period where only interest is payable, enhancing cash flow for borrowers.

Tiered Pricing Matrix

Loan costs aren't uniform. Based on factors like loan amount and term, borrowers might face different pricing structures.

Maximum Loan-to-Value Ratios

To curtail risks, there's a ceiling on how much can be borrowed against the property's value, usually up to 80%.

Financing Structures and Features

Preparation of Required Documentation

Financial Statements

Borrowers furnish detailed financial statements, offering insights into their fiscal health.

Property Appraisals

A professional appraisal ascertains the property's market value.

Borrower Background Check

Lenders dive deep into borrowers' histories, ensuring creditworthiness.

Preparation of Required Documentation


The Fannie Mae Multifamily Loan is a versatile financing tool, designed specifically for the multifamily housing sector.

Operated under the Delegated Underwriting and Servicing (DUS) program, it addresses a myriad of property types, from traditional apartments to specialized housing like student and senior residences.

Its competitive rates, flexible terms, and non-recourse nature make it a valuable asset for real estate developers and investors.

While it offers various products catering to unique needs, including green financing and affordable housing, potential borrowers must navigate stringent eligibility criteria and be aware of accompanying fees.

Partnering with DUS lenders, this loan streamlines the multifamily property financing process, ensuring both borrower needs and industry standards are met.

Fannie Mae Multifamily Loan FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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