Apartment Building Loans From $750,000

Apartment Building Loan Multifamily Financing

We are experts in securing apartment building loans. Sometimes referred to as multifamily mortgage loans, these types of loans have traditionally constituted the largest portion of our total business volume. We have information that can help you with how to buy an apartment building. Whether you are looking to finance a small apartment building, a complex with hundreds of units, or a co-operative looking for an underlying mortgage, we can help you find the optimal financing solution to meet your apartment mortgage loan needs. Our company has access to multiple capital sources, including: Fannie Mae, Freddie Mac, HUD, numerous local and national banks, Wall Street conduit lenders, Agency lenders, credit unions and insurance companies. We will entertain multifamily loan requests of all sizes, beginning at $750,000. Some of our benefits include:

Apartment building loan rates start as low as 3.47% (as of )
• No upfront application or processing fees
• Simplified application process
• Financing up to 80% LTV
• Terms and amortizations up to 30 years
• Long term fixed rates
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation

Fannie Mae Multifamily Financing

Fannie Mae is one of the nation’s leading secondary market sources of capital for apartment building financing. Fannie Mae provides mortgage capital for conventional, affordable housing, cooperatives, senior housing, student housing, manufactured housing communities and mobile home parks nationwide. Fannie Mae's apartment loan program offers many distinct advantages over traditional bank programs, including: long-term fixed rates up to 30 years, high LTV ratios up to 80%, and nonrecourse financing (no personal guarantee to the principals). Fannie Mae's offerings include:

Fannie Mae Multifamily Loans (Small)

Description

Simplified loan approval process for long term fixed rate financing for apartments, manufactured housing, mobile home parks, and cooperative apartments.

Loan Amount

$750,000 – $3,000,000 nationwide - up to $5,000,000 in major markets

Loan Terms

Fixed rates for 5, 7, 10, 12, 15, 20 and 30 years

Amortization

Up to 30 years, based on the age and condition of the property

Prepayment Penalty

Yield maintenance and step-down options available

Recourse

Non-recourse lending is available

Debt Service Coverage

1.25x minimum

Loan to Value

Up to 75% maximum LTV for refinances and 80% for purchases

Subordinate Financing

Supplemental mortgages are available after the first 12 months of the loan term or loan assumption

Occupancy

Typically expect to see 90% occupancy for the previous 3 months

Assumability

Non-recourse loans are assumable with the Lender’s consent and a 1% fee

Taxes and Insurance Escrows

May be waived on lower LTV loans

Net Worth and Liquidity

Net worth and liquidity requirements must be met

Replacement Reserve Escrows

To be determined based upon appraisal and engineering reports

Rate Lock

Rate lock occurs after commitment is issued; an early rate lock option is also available

Fees

Due Diligence Fee: $4,500 – $8,500 non-refundable fee for 3rd party reports and processing

Timing

45-60 days from complete application to closing

Fannie Mae Multifamily Loans (Large)

Description

Long term, fixed rate financing for the purchase or refinance of apartment buildings, mobile home parks and cooperative properties

Loan Amount

$3,000,000 and up

Loan Terms

Fixed rates for 5, 7, 10, 12, 15, 20 and 30 years

Amortization

Up to 30 years, based on property condition; Interest-only financing is available

Loan to Value Maximum

Up to 80%

Coverage Minimum

Typically 1.25x, 1.20x in certain markets

Borrower

Domestic single asset borrowing entity is required

Interest Rate

Subject to “tiered” LTV ratio (55%, 65%, and 80% tiers) 

Prepayment Terms

Yield maintenance and step-down prepayment options available

Third Party Reports

MAI Appraisal, Physical Needs Assessment, and Environmental Phase I Assessment are required, plus Seismic Report may be required for properties in Seismic Zones 3 and 4

Escrows

Real estate taxes, insurance, and replacement reserves subject to underwriting guidelines

Application Fee

$10,000; covers 3rd party reports and processing/underwriting costs

Legal Fees

$8,000 to $12,000 varying with characteristics of the deal

Timing

45-60 days from application to closing; dependent on 3rd party report timing and borrower’s submission of due diligence

Rate Lock

Typically, lock occurs after commitment is issued; Early Rate Lock option is available, allowing rate lock within 3-4 weeks of application

Assumability

Loan is assumable, subject to lender approval.

Freddie Mac Multifamily Loan Program (Small Balance)

Freddie Mac is another nationwide source of mortgage capital for apartment building financing. Up until recently, Freddie Mac focused exclusively on large balance loans. Now, Freddie Mac has unveiled a small balance apartment loan program to compete with Fannie Mae. These loans have very competitive rates, flexible prepayment options, and allow for cash out. These loans are called hybrid ARMs as they have fixed rates for the initial 5, 7, or 10 years followed by an adjustable-rate period and 30 year amortizations.  Available options include a five-year fixed followed by a 15 year adjustable, seven year fixed followed by a 13 year adjustable, and a 10 year fixed followed by a 10 year adjustable. All loans come with step down prepayment penalties (such as 5%, 4%, 3%, 2%, 1%) instead of yield maintenance.

Loan Amount

$1 million to $5 million

Loan Purpose

Purchase or refinance, including cash out refinances

Amortization

Up to 30 years

Property Types

Apartment buildings of 5+ units

Debt Service Coverage

1.20x in top markets, 1.25x nationwide

Maximum Loan to Value

80%

Recourse

Non-Recourse

Credit Score

Minimum of 650

Interest Only

Interest only loans are available

Occupancy

Minimum occupancy of 90% for 90 days

Taxes/Insurance

Escrows for taxes and insurance may be waived

Replacement Reserves

Not usually required

Rate Lock Deposit

1% at rate lock, refundable at closing

Adjustments

Annual and lifetime caps on all adjustments

Assumable

Yes

Bank Multifamily Mortgage Program

In addition to offering loans from agency lenders Fannie Mae and Freddie Mac, we also offer many different bank and portfolio loan programs. While the agency lenders typically have the lowest rates available in the market, many times the borrower would be better off obtaining an apartment building loan from a traditional portfolio lender. Often times, a portfolio product will better serve the needs of the borrower by offering more flexible underwriting and loan terms.  Some of the key advantages to a portfolio or bank loan include:

Smaller loan sizes (down to a minimum of $500,000)

Flexible underwriting guidelines

Flexible prepayment penalties

Properties that are in need of repairs, maintenance, or updating

Properties in less than desirable markets

Properties in smaller markets

Borrowers with difficulty providing tax returns

Borrowers with past credit issues

Properties with less than stellar cash flow

Borrowers who are not citizens or Green card holders

Mixed-use properties containing commercial income

Properties that house college students in college towns

Loans that require cross collateralization with other properties

HUD contracts, HAP contracts and Section 8 tenants acceptable

Mobile home parks and manufactured housing communities

Purchases where the down payment results from a gift from family members

Loans with long-term amortization and no balloon payments

Commercial Mortgage-Backed Securities (CMBS Loans)

Another major source of mortgage capital for apartment building loans is the commercial mortgage-backed securities market through Wall Street investment banks. CMBS lenders make individual loans to borrowers which are then packaged and sold to investors as securities. These loans provide interest rate yield to their investors while contributing liquidity to the capital markets. This liquidity in the markets means lower commercial mortgage rates to borrowers. Borrowers are well served when there are multiple sources of capital in the market. Some of the benefits of a CMBS loan include:

LOAN AMOUNT

$1 million to $10 million+

MARKETS

Primary, Secondary, and Select Tertiary Markets

ELIGIBLE PROPERTIES

Multifamily, Manufactured Housing, Office, Retail, Industrial and Self-Storage

SECURITY

First Lien Mortgage

TERM (YEARS)

10 years

AMORTIZATION (YEARS)

25 – 30 years

MAXIMUM LOAN TO VALUE

75%

MINIMUM DSCR

1.25x

RATE

Fixed rate based on spread premium over 10-year US swap rates

NON-RECOURSE

Non-Recourse, except for standard industry carve outs

PREPAYMENT

Permitted after a typical lock out period, subject to defeasance

ASSUMABLE

Permitted, subject to Lender’s Approval and 1% assumption fee

CAPPED COSTS

3rd party costs & legal are capped

RESERVES

Real Estate Taxes, Insurance, Replacement Reserves, TI/LC (if applicable), and others as reasonably determined by underwriting

Multifamily Bridge Loan

Very often, a property does not qualify for traditional lender programs for various reasons including: vacant properties, properties with un-stabilized occupancy, properties in need of major repair or remodeling, properties that do not cash flow or are underperforming, or loans that must close with a very quick timeline. These loans are very often best served by a bridge loan. Bridge loans are short-term loans, usually at higher rates than traditional financing that allow the borrower the time and money to reposition a property in order to qualify for traditional bank loans in the future. Some of the benefits of a bridge loan include:

Locations

Nationwide

Property Types

All property types considered

Loan Amount

$1,000,000 and up

Loan Term

12 – 36 Months Interest Only

Loan to Value

Up to 75% LTV

Typical Situations

Lease-ups, Repositioning or transitional properties, Foreclosure purchases, Discounted payoffs (DPOs), Cash-out financing, Tight closing deadlines, Refinancing of maturing loans, Properties exiting bankruptcy, Partner buyouts, Hard money loans (considered on a case-by-case basis.)

DSCR

Cash flowing and non-cash flowing properties

Processing Fee & Expense Deposit

Expense deposit required to cover 3rd party reports and underwriting fees

Reserves

Tenant improvements, Leasing commissions and Capital expenditures may be escrowed

Sponsor/Borrower

Personal credit score of 675 or better

Borrowing Entity

Operating entity occupying the property or special purpose entity

Recourse

Non Recourse

Assumability

Not assumable

Prepayment

Determined on a case by case basis