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Home >
Commercial Loan Center Refinance or Purchase |
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Fannie Mae DUS Multifamily Loan Program Overview
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The DUS platform is Fannie
Mae's standard multifamily loan program for loan size above
$3 million with no maximum loan size. More individual and
institutional investors turn to the Fannie Mae DUS
platform to finance the multifamily class of assets than
any other source. The DUS platform is designed to
deliver low rate fixed and variable rate apartment
financing at industry low rates with customized terms
and certainty of execution. Program allows for a
specific tenant concentration (student, military,
corporate) up to 80% - above 80% available through their
respective dedicated program (e.g.
Student
Housing,
Military Housing). Properties with a HAP contract or
other regulatory agreement must be processed through the
Affordable
Housing program.
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Apartment loans from $3 million
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Non-recourse with standard carve-outs
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Up to 80% LTV
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Interest only payment options
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Customized fixed rate terms from 5-30 years
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Tiered risk based pricing
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Single or multi-asset properties
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Credit facilities starting at $55 million
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Mezzanine financing available
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Early and extended rate locks
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Fannie Mae DUS Apartment Loan Program Guidelines
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Eligible Properties |
Stabilized 5+ unit multifamily, condos,
town homes, co-op, residential/commercial
mixed-use, properties with up to 80% tenant
concentration, Section 8 (tenant based). |
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Ineligible Properties |
Condos with fractured ownership
structure, properties belonging to an HOA,
HAP contract (must be processed through
Affordable Loan program), Phased
properties require a waiver, construction,
substantial rehab/renovation, town home or
duplex properties that are non-contiguous,
properties with a healthcare component (may
be processed through the
Seniors Housing program). |
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Eligible Locations |
All 50 states, Puerto Rico, U.S. Virgin
Islands, Guam. |
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Loan Size |
$3,000,000 with no maximum. Lower loan
sizes considered on an exception basis. e.g.
Loan size under $3mm with a tenant
concentration can be processed under the DUS
platform. |
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Fixed Rate Term |
5, 7, 10, 12, 15, 18, 20, 22, 25, 30. |
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Floating Rate |
Floating rate with option to convert to
fixed rate available. |
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Amortization |
30 years. Loans are balloons. Hybrid
available at a premium. |
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Minimum DSCR |
1.25. |
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Maximum LTV |
80% for purchase and rate and term
refinance. 80% for cash out refinances if
property is located in a major market. 75% for cash out refinances
for properties located in smaller markets and
5-year fixed rate term. |
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Mezzanine Financing |
Available. |
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Minimum Occupancy |
85% physical / 80% economic for 90 days
prior to closing. |
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Interest Only |
Available. |
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Interest Accrual |
Actual/360 or 30/360. |
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Prepayment Penalty |
The greater of 1% or yield maintenance. |
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Guarantee |
Non-recourse for most loans subject to
standard carve-outs. |
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Assumable |
Yes, subject to lender approval. |
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Supplemental Loan |
Available 12 months from date of closing
of first loan. |
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Impounds |
Tax and insurance required. |
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Replacement Reserves |
Required. |
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Subordinate Debt |
Not permitted. |
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Rate Lock |
At commitment. Extended rate lock up to
six months available. |
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Borrower |
Single asset single purpose bankruptcy
remote U.S. entity. |
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Sponsor Requirements |
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680 minimum credit score
(unlike the
Fannie Mae Multifamily Small Loan program, some flexibility
with credit score and overall credit in general).
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Local ownership doesn't
require prior
multifamily ownership experience.
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Absentee ownership requires
two years comparable multifamily ownership
experience (exceptions made for strong sponsorship
and asset quality).
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Pre-Review Markets |
Michigan, Indiana, Ohio (excluding
Columbus) Las Vegas, Tulsa, Atlanta,
Houston, Odessa, Midland, San Bernardino,
Riverside, Kennewick, Oklahoma City,
Atlanta, Puerto Rico, U.S. Virgin Islands,
Guam, Fayetteville, Wyoming, New Orleans,
Wichita Falls. |
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Underwritten NOI |
Fannie requires a minimum expense for
specific expense line items, e.g.
maintenance and repairs, management,
payroll, general and administrative and
replacement reserves. |
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What You Need to Know
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Program descriptions,
highlights and underwriting guidelines are helpful when
considering if an apartment loan program is right for
you and your property. However, they don't always tell
the whole story. Below is what you need to know about
the Fannie Mae DUS Apartment loan program that
program guidelines and highlights don't tell you.
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Unlike the
Fannie Mae Small Apartment Loan program, Fannie
Mae doesn't have specific financial capacity
requirements for its DUS Apartment Loan program (net
worth and liquidity).
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Various lien, litigation and bankruptcy searches are
required for Borrowing Entities and Key Principals.
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Asset quality and condition are important. A
property condition inspection is completed and any
life, health and safety related deficiencies must be
cured prior to closing. GFCI outlets must be
installed in all kitchens and baths.
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Properties with tuck under or subterranean parking
that are located in Seismic zones 3 and 4 require a
PML report. Properties built prior to 1980 that have
not had a seismic reinforcement or retrofit
completed are generally ineligible. Properties with
unreinforced masonry construction are ineligible.
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Insurance for secondary market programs (Fannie,
Freddie, HUD CMBS) typically requires more coverage
than traditional banks, resulting
in a higher insurance expense.
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Absentee ownership requires professional third party
management.
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While Fannie Mae apartment loans are non-recourse,
all key principals must sign an exceptions to
non-recourse document and each have joint and
several liability.
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Non-contiguous properties require a Fannie Mae
waiver (which is difficult to obtain).
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Phased properties require a Fannie Mae waiver (which
is difficult to obtain).
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Properties that are a part of a PUD and/or belong to
an HOA are generally ineligible.
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