Fannie Mae Hybrid Adjustable Rate Mortgage (ARM)

There are many great reasons to invest in a multifamily property project. These transactions can be complex, so it is critical that you have an experienced advisor by your side during the process.  The dedicated team at LSG Lending Advisors has years of expertise in helping our clients apply for and close these specialized types of loans. Whether your project will be a purchase, acquisition, new construction, refinance or rehabilitation, we can help you complete the transaction successfully. We take great pride in creating custom made solutions to meet the unique needs of every client.

  • 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.

Our team can expertly guide you regarding adherence to FHA/HUD MAP lending guidelines and we also have established relationships with some of the best FHA/HUD MAP approved lenders in the marketplace. You can count on LSG Lending Advisors to help you successfully obtain a multifamily property loan. Contact us today to learn more about why we are the one stop solution for all of your financing needs.

The Fannie Mae Hybrid Adjustable Rate Mortgage (ARM) program offers properties with loan amounts of $3 million or less in nationwide markets, and $5 million or less in certain high cost markets an introductory 5, 7, and 10-year fixed rate term followed by a 25, 23, or 20-year adjustable rate term. The adjustable rate term is based on the 6-month LIBOR index.

Term Sheet for Fannie Mae Hybrid ARM

 

Term 5-, 7- or 10-year fixed rate term followed by 25-, 23-, or 20-year adjustable rate term.
Amortization 30 years.
Maximum LTV Up to 80%.
Minimum DSCR 1.25x actual amortizing DSCR, if the Hybrid ARM Loan is secured by a property located outside of a strong market or Los Angeles MSA, the maximum loan amount must be determined by using a minimum 1.00 DSCR sufficient to cover a debt service constant that equals the sum of (i) the interest rate during the fixed rate term; plus (ii) 2.50%.
Fixed Rate Lock 30- to 180-day commitments. Borrowers may lock a rate with the Streamlined Rate Lock option.
Interest Rate
Adjustments
Starting in the adjustable rate period, adjusts based on changes to the underlying index and is equal to the index plus the margin.
Index during Adjustable Rate Term 6 month LIBOR.
Margin during Adjustable Rate Term 0.80%, plus the guaranty fee rate and the servicing fee rate in effect at rate lock.
Prepayment Availability

Flexible prepayment options available during the fixed rate term, including yield maintenance and declining prepayment premium.

No prepayment fees during the adjustable rate period.

Maximum Interest Rate during Adjustable Rate Term

Starting with the conversion from the fixed interest rate to the adjustable interest rate and thereafter, maximum semi-annual interest rate adjustment of 1% up or down.

Maximum lifetime interest rate to borrower capped at 5% over the initial fixed rate.

Lifetime Interest Rate Floor The interest rate will never be less than the margin.
Supplemental Financing Supplemental loans are not available.
Accrual Actual/360 or 30/360.
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 If underwriting to Small Mortgage Loans, then streamlined inspection and environmental screening using the ASTM E-1528-14 protocol. Otherwise, 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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