Fannie Mae ARM 7-6 Multifamily Loan

The Fannie Mae ARM 7-6 Multifamily Loan is a great option for investors looking for an adjustable loan. This product has a loan term of 7 years, and allows up to 80% LTV. Additionally, borrowers can convert the Fannie Mae ARM 7-6 into a fixed-rate loan any time between the first day of the second year and the first day of the sixth year of the loan. This provides wonderful flexibility for multifamily investors who are interested in starting with an adjustable rate but converting into a fixed rate at some point during the loan term.

Fannie Mae ARM 7-6 Multifamily Loan Highlights

Loan Term - 7 years

Amortization - Up to 30 years

LTV - Up to 80%

DSCR - Minimum of 1.00x at the maximum lifetime interest rate

Interest Rate Adjustments:

• Equal to index + spread. Will adjust with changes to underlying index

Index - 30- Day Average SOFR

Interest Rate Cap and Floor:

• Maximum monthly interest rate adjustment of plus or minus 1%.
• Maximum lifetime interest rate to Borrower capped at 6%
• Interest rate will never be less than the Margin

Property Eligibility:

• Available for existing and stabilized multifamily properties including: Conventional, Multifamily Affordable Housing, Seniors Housing, Student Housing, and Manufactured Housing Communities
• Loans are available for both acquisitions and refinances

Rate Lock

• Maximum 30-day commitments

Prepayment:

• No prepayment is permitted during the Lockout Period which is usually the first year of the loan
• After Lockout Period, 1% prepayment premium
• No prepayment premium during the "open period"- the last 3 months of the loan term.

Recourse:

• Loans are non-recourse with standard “bad boy” carveouts
• Fixed-Rate Conversion:
  The ARM 7-6 can be converted to a 7 or 10 year fixed loan any time between the first day of the second year of the loan and the first day of the sixth year of the loan, without any prepayment penalties. The amount of the loan cannot increase, but borrowers can apply for supplemental financing. Converted loans have a yield maintenance prepayment penalty. Conversion requires minimal re-underwriting. However, the lender must confirm that the current Net Cash Flow can support the new fixed rate loan terms.

Other terms and benefits:

• Low Cost Financing
• No maximum loan size
• Maximum interest rate is set at rate lock
• Supplemental financing is available
• Escrows are typically required for taxes, insurance and replacement reserves
• Loans are assumable