Fannie Mae Adjustable Rate Mortgage (ARM) 7-6

After many years in our business, we know that no two multifamily property financing transactions are alike. Every client has their own unique goals and challenges. You can depend on the highly qualified team at LSG Lending Advisors to find the right solution for your specific needs. Whether you are interested in a purchase, acquisition, new construction, refinance or rehabilitation, we have the knowledge to help you close a successful multifamily finance transaction.

  • Over 7 years multifamily property loan underwriting experience.
  • Expert knowledge of financial terms and principles.
  • Highly experienced at guiding clients through complex transactions.
  • In depth analysis of current operating statements and projected financials.
  • Specialists in evaluating third party reports, including appraisals, environmental documents, market studies and project capital needs assessments.
  • Loan review documentation.
  • Tailor fit financing solutions for every client.

We have a great deal of experience in evaluating current or future multifamily property projects for compliance with FHA/HUD MAP lending guidelines. We also have access to some of the best FHA/HUD MAP approved lenders in the industry. We will expertly guide you through the entire loan process from loan documentation to closing. Contact us today to discuss how LSG Lending Advisors can be an important partner in making your multifamily property financing project a great success.

The Fannie Mae Multifamily Adjustable Rate Mortgage (ARM) 7-6 offers a 7-year variable-rate financing option with an embedded cap and an option to convert to fixed-rate. The maximum interest rate is set at the time the rate is locked, but capped at 6%, plus the guaranty fee and plus the servicing fee. This program is for acquisition or refinance, and existing, stabilized multifamily properties of all types listed below are eligible. 

Term Sheet for Fannie Mae Multifamily ARM 7-6

Term 7 years.
Amortization Up to 30 years.
Interest Rate Adjustments Adjusts based on changes to the underlying index and is equal to the index plus the margin.
Maximum LTV 80%.
Minimum DSCR

1.00x at the maximum lifetime interest rate.

Mortgage loan amount shall not exceed that of a fixed-rate loan with similar terms.

Rate Lock 30-day commitments.
Index 1 month LIBOR.
Supplemental Financing Supplemental loans are available.
Prepayment Availability

No prepayment first year, 1% prepayment premium thereafter. No prepayment premium during the last 3 months of the loan term.

When refinancing into a fixed-rate product with Fannie Mae, the prepayment premium may be waived under certain conditions.

Interest Rate Cap

Maximum monthly interest rate adjustment of 1% up or down.

Maximum lifetime interest rate to borrower capped at 6%, plus the guaranty fee, plus the servicing fee.

Interest Rate Floor The interest rate will never be less than the margin, which is the sum of the investor spread, the guaranty fee, and the servicing fee.
Conversion to Fixed Rate Subject to the terms of the loan documents, the loan may be converted to a fixed-rate loan on any rate change date beginning on the first day of the second loan year and ending on the first day of the sixth loan year.
  • No prepayment premium is charged at the time that the mortgage loan converts.
  • Conversion requires minimal re-underwriting; lender determines that the current net cash flow can support the new fixed-rate.
  • No increase in the loan amount; may be eligible for a supplemental loan.
Accrual Actual/360.
Recourse Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.
Escrows Replacement reserve, tax, and insurance escrows are typically required.
Third-Party Reports

Standard third-party reports required, including:

  • Appraisal
  • Phase I Environmental Site Assessment, and
  • Property Condition Assessment.
Assumption Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience.

 

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