The Federal National Mortgage Association, commonly known as Fannie Mae, is a key player in financing multifamily properties. It’s one of the biggest supporters of affordable housing initiatives and facilitates access to capital for multifamily property owners.
Through various loan programs and partnerships, Fannie Mae aims to address the growing demand for rental housing while ensuring affordability and stability in the market. To date, the organization has funded more than 10 million units — that’s 10 million roofs over as many (or more) heads.
As a top producer for Fannie Mae financing for many years, Walker & Dunlop knows the agency’s programs inside and out. Here’s what CRE investors and clients should know about using Fannie Mae to finance a multifamily property and shape the American real estate landscape.
Fannie Mae recognized the growing need for affordable rental housing and began expanding to multifamily borrowers. It introduced the Multifamily Mortgage Participation Certificate (MPC) program, which allowed clients to purchase shares in pools of multifamily mortgages.
The Charter Act broadened Fannie Mae's authority. This allowed the agency to purchase and securitize multifamily loans, promoting liquidity in the market and increasing the availability of capital for rental housing.
It has since introduced various programs to encourage affordable housing, including the Affordable Housing Program (AHP) and the DUS (Delegated Underwriting and Servicing) program. Since its inception in 1988, the DUS program has been central to Fannie Mae’s success, helping to streamline the underwriting and approval process for multifamily clients and making it easier for lenders to work with Fannie Mae.
Under its multifamily loan arm, Fannie Mae offers several types of loans, each with varying guidelines and processes for securing funds.
Here’s a closer look at just a few of Fannie Mae’s offerings:
Building new affordable housing is futile if existing options aren’t also preserved. Fannie Mae offers loans to improve stabilized rental properties with rent and income restrictions.
Fannie Mae offers incentives to clients creating “greener” properties, such as those with energy and water conservation features. Clients may qualify for lower interest rates on properties with an eligible Green Building Certification or those that invest in Active Design or Resident Services. Learn more about Green Financing.
This permanent loan is designed to construct, acquire, or rehab rural properties via the USDA’s RD 538 program. With backing by the USDA, clients can mitigate loan loss up to 90 percent while enjoying flexible loan terms and amortization.
More seniors aim to “age in place” and live independently, and dedicated senior housing options can help to fill this growing need. Fannie Mae seniors housing loans encompass several property types, including dementia care, assisted living facilities, and independent living complexes.
With the cost of higher education climbing, affordable student housing is in high demand. A student housing Fannie Mae loan can help address this growing need, provided that 40 percent or more occupants are undergrad or grad students (dedicated student properties have additional considerations).
Workforce housing loans are Sponsor-Initiated Affordability (SIA) properties that cater to populations making 80 percent or less than the area’s median income (AMI). This loan incentivizes the voluntary creation or preservation of affordable properties.
Want more? Here’s a complete list of Fannie Mae loans for multifamily properties.
Many commercial real estate participants are attracted to Fannie Mae Multifamily Financing options for several reasons, including:
The DUS program, in particular, works because the interests of the borrower, lender, investor, and Fannie Mae are all aligned.
Ongoing inflation has sparked new interest in affordable housing as the average consumer’s buying power declines. Fannie Mae closed 2022 with a record $69 billion in volume, underscoring the role it plays in supporting the multifamily market. Fannie Mae will continue to play a pivotal role in expanding access to capital that can create affordable housing facilities for various needs.
Fannie Mae's multifamily financing offerings create a wealth of opportunities for commercial real estate clients and the families they serve. With greater access to capital, clients can help to shape urban landscapes and contribute to the greater good of putting more people under roofs.
With experience as a DUS lender since the program’s inception in 1988, we work tenaciously with Fannie Mae to offer the best advice and lending options to our clients. For many years, Walker & Dunlop has been a top Fannie Mae producer, and our stellar record continues to shine. Walker & Dunlop was the #1 DUS lender by volume in 2022 and has been the #1 lender 8 out of the last 11 years. We’re continuing to help our clients access funding to move multifamily projects forward.
Ready to leverage Fannie Mae Multifamily Financing for your next commercial real estate venture? Our team of dedicated experts is prepared to guide you through the intricacies of Fannie Mae's offerings. Connect with our team today.