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Apartment Financing Options

April 9, 2014

Apartment financing options for multifamily properties of five units or more are available in America today in six categories. At Apartment Loan Store, we've specialized in all of these apartment financing options since 1997:

  • Agency Loans

Fannie Mae – Minimum Loan for most lenders is $1,000,000. However, Fannie Mae will go down to $300,000. (But it is very challenging to find a FNMA lender willing to do a loan under $500,000.) These loans can be fixed from 5 years to 30 years (the longer you fix the rate, the higher the rate), have a 30-year amortization, and offer some of the lowest rates available: up to 80% loan to value. Light doc with no tax returns required. Yield maintenance prepayment penalty.

Freddie Mac – Minimum loan for most lenders is $3,000,000. These loans can be fixed from 5 to 30 years (the longer you fix the rate, the higher the rate), have a 30-year amortization and up to 80% loan to value. Rates slightly higher on some fixed-rate options than Fannie Mae. Light doc with no tax returns. Yield maintenance prepayment penalty.

HUD, FHA – These loans, starting at $1,500,000 for most lenders, have the lowest 35-year fixed rate, 35-year amortization loan options available in America. Up to 83.3% loan to value. Because these loans take six months or longer to close, purchases often will not work. But for refinancing, if you have the time, they are well worth the effort. Refinancing only available for buildings that obtained their certificates of occupancy 3 years ago or longer. Very large amount of documents required but no tax returns. Declining prepay.

  • Commercial Mortgage Backed Security Loans (CMBS)

These loans, also known as conduit loans, start at $2,000,000. With loans up to 75%, very low rates can be fixed for 5 or 10 years with a 30-year amortization. Light doc with no tax returns required.  Defeasance prepayment penalty.

  • Insurance Company Loans

Starting at $5,000,000, these loans go up to 70% LTV and have 25- or 30-year amortizations. Very low rates can be fixed for 10, 15, and up to 25 years fully amortizing. Usually a yield maintenance prepayment penalty.

  • National and Regional Bank Programs

Starting at $500,000, and up to 75% LTV, these loans have 3-, 5-, 7- and 10-year fixed-rate options. Rates are decent with declining prepayment penalty or yield maintenance. These loans are usually full doc and require tax returns.

  • Private Lender Programs

Often used for borrowers who have less than good credit and for properties that are not fully stabilized (have lower than market occupancy). Rates are higher and loan to values average 65% to 75%. Terms average 2 to 3 years.

  • Bridge Loan/Hard Money Loan

These programs average 65% loan to value, with rates in the 6.00% to 13.00% range, and usually have no prepayment penalties. But sometimes there is a 1.00% exit fee. Used for value-added, rehab projects, and for borrowers with less than good credit. Loans can close in as little as 2 weeks.

To find out more about these loan programs or to get prequalified, call Apartment Loan Store at 866-811-9515 to talk to one of our friendly loan specialists.

By Terry Painter, President
Apartment Loan Store and Business Loan Store