Government-backed multifamily financing are multifamily loans sponsored by Fannie MaeFreddie Mac, as well as the FHA. There are more than 5 government-backed multifamily financing options available to investors which can either finance properties with 2 – 4 units or properties with 5+ units. Government-backed multifamily financing have terms between 5 – 35 years and are issued by government-approved mortgage lenders.

Let’s look at the three broad government-backed multifamily financing options in greater detail:

Government-Backed Multifamily Financing Rates, Terms, & Qualifications

Fannie Mae Multifamily Loans
Freddie Mac
Multifamily Loans
FHA Multifamily Loans
Average Loan Amount
$100,000 – $5,000,000+
(Max Loan-to-Value Ratio of 80%)
$1,00,000 – $6,000,000+
(Max Loan-to-Value Ratio of 80%)
$1,000,000 – No Maximum
(Max Loan-to-Value Ratio of 87%)
Average Down Payment
20%+ Loan-to-Value Ratio (LTV)
20%+ Loan-to-Value Ratio (LTV)
13%+ Loan-to-Value Ratio (LTV)
Average Interest Rates
3% – 6% Fixed or Variable
3% – 6% Fixed or Variable
3% – 5% Fixed
Average Lender Fees
0% – 1% Loan Origination Fees,
2% – 5% Closing Costs,
1% Prepayment Penalty
0% – 1% Loan Origination Fees,
2% – 5% Closing Costs,
1% Prepayment Penalty
1% – 3% Loan Origination Fee,
2% – 5% Closing Costs,
1% FHA Inspection Fee,
1% Mortgage Insurance Premium,
$10,000+ Legal Fees
Average Loan Term
5 – 30 Years
5 – 30 Years
Up to 35 Years
Average Time to Approval & Funding
60 – 90 Days
60 – 90 Days
60 – 180 Days
Average Qualifications
2 – 5+ Unit Building,
680+ Personal Credit Score (check your credit score for free here),
DSCR 1.25+,
85% Minimum Occupancy
9+ Months Liquidity,
3+ Months Stable Occupancy
2 – 5+ Unit Building,
650+ Personal Credit Score (check your credit score for free here),
DSCR 1.25+,
90% Minimum Occupancy
9+ Months Liquidity,
3+ Months Stable Occupancy
5+ Unit Building,
650+ Personal Credit Score (check your credit score for free here),
DSCR 1.15+,
95% Minimum Occupancy
9+ Months Liquidity,
6+ Months Stable Occupancy
Learn More
Visit CREFCOA’s Fannie Mae Multifamily Loan Program
Visit CREFCOA’s Freddie Mac Multifamily Loan Program
Visit CREFCOA’s HUD FHA 223(f) Apartment Loan Program

Government-Backed Multifamily Financing Loan Amount & Down Payment

Both Fannie Mae as well as Freddie Mac have conforming multifamily loans that can finance properties between 2 – 4 units. For these government-backed conforming loans, the minimum loan amount can be as low as $100,000 and the maximum amount is as follows:

  • 2-unit property: $533,800 – $800,755
  • 3- unit property: $645,300 – $967,950
  • 4-unit property: $801,950 – $1,202,925

The loan amount for these conforming government loans are also capped at 80% of a property’s loan-to-value (LTV) ratio. This means that real estate investors should expect to cover at least 20% of a multifamily property’s purchase price as the down payment.

Fannie Mae and Freddie Mac also have multifamily financing loans that can finance properties with 5 or more units. These government-backed loans, which are often referred to as “small balance loans” or “multifamily loans,” typically have the following loan amounts:

  • Fannie Mae: $750,000 – $3,000,000+
  • Freddie Mac: $1,00,000 – $6,000,000+

For both Fannie Mae and Freddie Mac, the maximum loan amount is set at 80% of a property’s LTV. This means that like the conforming loans above, investors should expect to cover at least 20% of the multifamily’s purchase price as the down payment.

The FHA, on the other hand, doesn’t have a loan product for multifamily properties with less than 4 units. Instead, it has an FHA 223(f) apartment loan option for multifamily properties with 5 or more units. The minimum loan amount is $1,000,000 and there is no maximum amount.

However, the FHA 223(f) apartment loan can finance up to 87% of a property’s LTV, meaning that the down payment would only be 13% or more of the purchase price.

Government-Backed Multifamily Financing Interest Rates & Fees

The average interest rate found on a Fannie Mae or Freddie Mac multifamily loan is currently between 3% – 6%. These interest rates can either be fixed or variable. Fixed rates are typically amortized over the term of the loan while variable interest rates adjust after 3 – 10 years based on the current 6-month LIBOR rate. There is usually a maximum interest rate increase around 5%

When it comes to the fees on a multifamily loan, Fannie Mae and Freddie Mac are also similar. For example, the typical fees found on these government-backed loans include:

  • Loan origination fees: 0% – 1%
  • Closing costs: 2% – 5%
  • Prepayment penalty: 1%

These costs are usually taken directly out of the loan and aren’t considered out-of-pocket costs.

For the FHA-backed multifamily loan, interest rates are currently between 3% – 5% and are fixed throughout the loan’s term. When it comes to the other costs associated with the FHA 223(f) loan, the fees are comparably higher:

  • Loan origination fees: 0% – 3%
  • Closing costs: 2% – 5%
  • FHA inspection fee: 1%
  • Mortgage insurance premium: 1%
  • Legal fees: $10,000+

Government-Backed Multifamily Financing Terms

Both Fannie Mae as well as Freddie Mac multifamily loans have terms between 5 – 30 years. Shorter terms have adjustable rates while longer terms have fixed rates that are fully amortized. The time to approval and funding with these multifamily loans can be anywhere from 60 – 90 days.

For FHA-backed multifamily loans, the term can be as long as 35 years and interest rates are fixed over the entire term. Since there are more regulations and guidelines with FHA loans, the time to approval and funding is longer at 60 – 180 days.

Government-Backed Multifamily Financing Qualifications

Fannie Mae and Freddie Mac’s multifamily financing options together can fund the purchase of a multifamily property between 2 – 5+ units. Just remember that the conforming loans can finance properties between 2 – 4 units while the nonconforming multifamily loans can finance properties of 5+ units.

Specifically, the qualifications for these loans are as follows:

  • Units: 2 – 5+
  • Personal credit score: 650 – 680+ (check your credit score for free here),
  • DSCR: 1.25+, which is the amount of cash flow available to cover debt payments
  • Minimum occupancy: 85% – 90%
  • Liquidity: 9+ Months
  • Occupancy: 3+ Months

However, the FHA-backed multifamily financing product has different qualifications. First, it can only finance apartment buildings with 5 or more units. Further, it requires the following minimum qualifications:

  • Units: 5+
  • Personal credit score: 650+ (check your credit score for free here),
  • DSCR 1.15+
  • Minimum occupancy: 95%
  • Liquidity: 9+ Months
  • Occupancy: 6+ Months

Where to Find Government-Backed Multifamily Financing

The Fannie Mae, Freddie Mac, and FHA multifamily financing options are originated and offered by government-approved mortgage lenders. For example, the Commercial Real Estate Finance Company of America offers all government-backed multifamily loan options. Other lenders such as Chase Bank and US Bank also offer these types of loans.