There are more programs available to finance multi family properties than any other kind of property. The primary reason for this is that over a long period of time multi family properties have had the lowest rate of default of any type of commercial real estate. In addition these properties have had an excellent growth rate.
The types of financing available are Agency loans provided by quasi governmental agencies, namely Fannie May, Freddie Mac, FNA and USDA. In addition to the Agencies we have Banks, Insurance Companies, CMBS Conduit lenders and REITs. There may be more.
Each of these lenders has a very specific set of parameters. Different interest rates, fixed or variable loans and different maturities. Yet all of the lenders in this market try to be competitive. Most recently we have been using agency loans, Fannie and Freddie, in most cases. Generally the two are very similar.
Fannie May loans start at $750,000, they are 80% LTV, have a term of 3 to 30 years and amortization of 15 to 30 years. Freddie Mac loans are also 80% LTV, have a term of 5 to 30 years and the amortization is 30 years. We seem to be involved mostly in purchase transactions. We go with the lender who gives us the best funding. We have not used HUD, FHA multi family financing much. USDA loans are available for rural locations.
At the end of 2019 Fannie and Freddie ran out of money. So many loans were delayed, others went to CMBS Conduit lenders. These have only ten year terms and the interest rates may be a shade higher. The situation has now corrected.
Talk to us about your needs. This is a very active market and we stay competitive,
