Agency Multifamily Apartment Loans
(Fannie Mae & Freddie Mac)
Overview
Agency loans are multifamily loan programs sponsored by government-sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac — that provide competitive, long-term financing for the acquisition, refinance, or rehabilitation of apartment buildings with five or more units.
These programs are not direct government loans, but they are backed or purchased by Fannie Mae and Freddie Mac from approved lenders, making them low-risk for lenders and attractive for borrowers.
✅ Key Features
| Feature | Fannie Mae & Freddie Mac Loans |
|---|---|
| Loan Size | $1 million to $100+ million |
| Property Type | Multifamily (5+ units), senior housing, student housing |
| Loan Term | 5 to 30 years |
| Amortization | Up to 30 years (interest-only options available) |
| LTV (Loan-to-Value) | Up to 80% |
| DSCR (Debt Coverage) | 1.20x to 1.25x (varies by market and property) |
| Interest Rate | Fixed or floating, very competitive |
| Non-Recourse | Yes, with standard carve-outs |
| Prepayment | Yield maintenance or declining prepay (step-down) |
| Assumable | Yes (subject to lender approval) |
🧰 Eligible Property Types
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Conventional multifamily (5+ units)
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Affordable housing (LIHTC, Section 8)
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Senior housing (independent or assisted living)
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Student housing (dedicated student occupancy)
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Manufactured housing communities (Freddie Mac only)
🏦 Fannie Mae vs Freddie Mac — Key Differences
| Feature | Fannie Mae | Freddie Mac |
|---|---|---|
| Loan Origination | Delegated Underwriting (DUS) lenders | Optigo Seller/Servicers |
| Affordability Focus | Strong affordable housing incentives | Offers tailored affordable housing programs |
| Recycling of Capital | Lenders hold risk-share; encourages fast closings | Freddie often buys whole loans, securitizes |
| Underwriting Process | Delegated to lender (faster decision making) | More centralized with Freddie |
🧮 Underwriting Guidelines
Agency lenders will analyze:
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Net Operating Income (NOI) and DSCR
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Stabilized occupancy (usually 90%+ for past 90 days)
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Rent roll, trailing 12-month financials, and property condition
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Borrower experience and financial strength
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Location: property must be in eligible markets
📌 Benefits for Borrowers
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Long-term fixed rates with attractive terms
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Non-recourse structure protects personal assets
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Flexible underwriting with interest-only options
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High leverage (up to 80%)
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Assumable loans, aiding future buyers
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Ideal for stabilized or affordable properties
🚫 Typical Restrictions
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Not ideal for value-add deals needing major renovations
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Typically requires professional property management
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Stabilization required – not suited for lease-up properties
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Complex documentation and third-party reports required (appraisal, Phase I ESA, PCA)
📋 Documents Typically Required
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Personal financial statement & real estate schedule
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Rent roll & operating statements
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Purchase contract (if acquisition)
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Property photos and marketing materials
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Entity formation documents
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Third-party reports (Appraisal, Environmental, PCA)
👤 Ideal Borrower Profile
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Strong multifamily ownership or management experience
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Good personal liquidity and net worth
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Clean credit and no major bankruptcies or foreclosures
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Willing to comply with GSE reporting and management standards
🧑🏫 Training Takeaways for Brokers
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Understand the borrower profile that fits agency loans
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Know when to recommend agency loans vs banks, bridge, or CMBS
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Be aware of occupancy, location, and property condition requirements
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Prepare borrowers for the documentation and approval timeline
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Emphasize the benefits: non-recourse, low rates, high leverage