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Fannie Mae Affordable Housing

Fannie Mae Affordable Housing Financing For Multifamily Properties
  • The Fannie Mae Affordable Housing loan program makes financing affordable for investors who hold low-income residential properties. For properties that meet the program's strict low-income housing requirements, this program offers some of the most generous lending terms.

Fannie Mae Affordable Loan Highlights

Loan amount range:
$750,000+ (no fixed maximum).

Loan Term: 5-30 years, with up to 35 year amortizations.

Leverage: Maximum 80-90% LTV.

Prepayment Penalty: Yield maintenance or 1% prepayment.

Assumption: Assumable with lender approval.

Processing: $12,500 application fee and $3,000 processing fee common.

Advantages of Fannie Mae Affordable Loans

Fannie Mae Affordable Housing Loans offer several advantages for properties that qualify:

  • No Limit: No set maximum amount borrowed.
  • Availability: Available for acquisition or refinance.
  • Interest Rates: Highly competitive fixed or variable interest rates.
  • Terms: Up to 30 years, and amortization up to 35 years.
  • Non-Recourse: For all principals invested in the property.

Disadvantages of Fannie Mae Affordable Loans

Despite their many advantages, Fannie Mae Affordable Housing Loans aren't right for every property or situation. Some of their disadvantages include:

  • Strict: Affordable housing criteria must be met.
  • Processing Time: Underwriting takes a little longer because criteria must be verified.
  • Features: Interest-only and ballooning short-term loans are not available.
  • Prepayment penalties: Can be high during the first few years.
  • Fees: High application and processing fees.

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What Are Fannie Mae Multifamily Affordable Housing Loans?

Fannie Mae has multifamily mortgages that fit apartments and affordable housing projects. These housing loans are provided permanent, long-term fixed-rate debt for financing or even refinancing needed. The financing or refinancing is for the stabilization of multifamily housing properties that are provided with rent control or income restriction terms.

Most come with a $1 million minimum loan size at 1.20 DSCR. You can also get up to 80% LTV and receive flexible underwriting that helps with your specific housing property needs. There are various eligible property types like Section 8 contracts or expiring low-income housing tax credits that are available for you to use.

Many times if you are refinancing, you can use tax exempt-bonds for properties that have existing RD 515 loans or loans insured under Section 202 or 236 of the National Housing Act. This is an economy that's challenging to read and get ahead in with investments, real estate, stocks, and more. Sometimes changing economies are instrumental in providing for upticks and increased interest in investments for multifamily or commercial real estate.

Can Investors Seek Supplemental Funding in Addition to Fannie Mae Multifamily Affordable Housing Loans?

Fannie Mae Multifamily Affordable Housing loans are intended to act as the primary mortgage on a property, and therefore typically can't be used as additional financing on a property that's already mortgaged. 

Supplemental financing may be pursued after securing a multifamily affordable housing loan, however. Lenders typically require a 1-year period before supplemental funding can be obtained.

Do Fannie Mae Multifamily Affordable Housing Loans Have Fixed or Variable Interest Rates?

Fannie Mae Multifamily Affordable Housing Loans can come with fixed or variable interest rates, and both types of rates are available for up to 30 years. 

Borrowers may choose a long-term fixed rate if the current market rates are historically low. An adjustable rate might be preferable for shorter-term loans, or if borrowers need a long-term primary mortgage now but expect interest rates to fall.

Interest-only and ballooning loans generally aren't available through the affordable housing loan program. Thus, these loans often aren't suitable as a bridge or short-term loans for a property that won't be held at least 5 years.

How Much Do Fannie Mae Multifamily Affordable Housing Loans Cost to Obtain?

Fannie Mae Multifamily Affordable Housing Loans come with fairly high initial fees, partly because additional eligibility information must be checked.

Application fees of $12,500 and processing fees of $3,000 aren't uncommon. These don't include the downpayment of 1-3% of the loan balance. Of course, such costs become more affordable when considered alongside the total value of a loan that's at least $750,000 (and likely much more).

Can Fannie Mae Multifamily Affordable Housing Loans Be Used for Mixed-Use Properties?

While Fannie Mae Multifamily Affordable Housing Loans are intended for low-income residential properties, terms typically allow for a certain amount of commercial space. Most of these loans allow for up to 35% of the rentable area to be commercial space, and up to 20% of the gross income to come from commercial rents.