Interested in agency lending? Check out our Borrower Guide to see where you stack up

Fannie Mae and Freddie Mac (“the Agencies”) have some of the most competitive lending terms available to borrowers. What’s not to love about desirable terms and program flexibility? As an investor interested in Fannie Mae or Freddie Mac financing, you may wonder if you qualify. Take a look at our breakdown of some of the borrower qualifications below.

Minimum required net worth and liquidity

To qualify for Fannie Mae Small Loans and Freddie Mac Optigo Small Balance Loans (SBL) programs, borrowers must have a combined net worth equal to or greater than the loan amount, minimum $1 million. Liquidity must be equal to or greater than nine monthly principal and interest payments.

Minimum required credit score

An individual borrower must have a (FICO) Credit Score of 680 or better. However, if there are multiple borrowers, there is some additional flexibility–if you have questions about this, one of our experts would be happy to chat.

Owning/operating experience required

Given the non-recourse nature of their loans, Fannie Mae and Freddie Mac typically require their borrowers to have past experience owning and operating multifamily properties to ensure their collateral is in capable hands. Requirements between the two agencies are as follows:

Freddie Mac: At least one key principal must have:

• Ownership and control of a minimum of three multifamily properties (one held for at least the preceding two years) or
• Ownership and control of one multifamily property for at least the preceding five years, without interruption or
• Ownership and control of at least 10 units in 2- to 4-unit properties for at least the preceding two years.

Fannie Mae: If a borrower is non-local, they must have two years of multifamily experience or property management experience with a property of a similar size or larger than the property the borrower wishes to finance.

Citizenship requirement

Borrowers or key principals must:

• Be a citizen residing in the United States
• Be a permanent legal resident of the United States OR
• Meet specific foreign key principal requirements (Contact Walker & Dunlop for more details.)
• If an entity requests the loan, it must be organized in the United States.

Additional requirements

Background Check Requirements: Fannie Mae and Freddie Mac rarely lend to borrowers with past finance-related litigation or criminal records.

Recent history of any of the following may be another limitation:

• Bankruptcy
• Foreclosure
• Deed in lieu of foreclosure
• Other liquidation proceedings

Location Limitations: Fannie Mae and Freddie Mac want borrowers to be actively involved with the operations of their property. As such, Freddie Mac requires borrowers who wish to self-manage their properties to live within 100 miles of the property, while Fannie requires borrowers to live within 200 miles. Borrowers who live further than the specified distance may be required to employ a local third-party manager or on-site professional to handle the day-to-day management responsibilities.

Stabilization: With the exception of lease-up financing programs for recently constructed or renovated properties, properties generally must be fully stabilized with at least 90 percent occupancy for 90 days.

For in-depth specifics on the borrower guidelines, download our Program Comparison Guide. For inquiries, ask one of our multifamily experts or request a quote.