February 15, 2017

Advantages of an Agency Small Balance Multifamily Loan

Attention apartment owners:  Do you have a Modern loan?  If you have financed your property during the past few years, chances are you have a competitive rate – but are you aware that loans from government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac are available for loans starting as small as $1 million?  Their so-called “small balance” programs provide similar market-leading rates and terms as their conventional programs, but with a simplified loan process and lower fees.  These programs help the GSEs meet their federal mandate to provide competitive financing options to affordable housing properties, which are frequently smaller apartment buildings in secondary markets.

Did you know you that by refinancing into an “Agency” loan you may be able to reduce your monthly payment by extending the amortization term to 30 years or by taking advantage of an interest-only period?  And, if your current loan is with a bank, refinancing into an Agency enables you to get out from under your personal guarantee.  With non-recourse debt, the loan is secured only by the mortgaged property, meaning in the case of default, the lender cannot seek other compensation from the borrower beyond foreclosure on the property even if the value of the property does not cover the existing loan balance.

Small Balance Multifamily Loans – Program Highlights

  • 5, 7 and 10-year fixed-rate and hybrid ARMs
  • 30-year amortization
  • Partial and full-term interest-only available
  • Up to 80% LTV
  • Non-recourse
  • Cash-out options
  • Declining prepayment options
  • Loan amounts starting at $1MM
  • Competitive rates
  • Assumable
  • Minimum credit school of 650
  • Net worth: Equal to the loan amount
  • Liquidity: Equal to 9 months of principal and interest
  • No tax returns required
  • No deposit relationship required

Not sure if an Agency loan is right for you?  Let’s talk

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