Tap to get financing
Commercial Real Estate Loans
Loan Options
Permanent FinancingLoans Under $1MBridge LoansMezzanine FinancingConstruction LoansUSDA 538 Loan ProgramLife Company LoansSBA 7(a) LoansSBA 504 Loan ProgramFannie Mae LoansFreddie Mac LoansCMBS LoansHUD Multifamily LoansFix and Flip LoansHUD 223(f) LoansHUD 221(d)(4) LoansHUD 223(a)(7) LoansHUD 241(a) LoansHUD 232 LoansHUD 232/223(f) LoansHUD 232 LEAN LoansHUD 232/223(a)(7) Loans
Property Types
All Property TypesRetailOfficeIndustrialApartmentsSelf StorageHotelLandChurchSchoolAuto DealershipAuto Repair ShopCar WashGas StationHealthcareMedical OfficeDental OfficeVeterinaryFitness CenterBowling AlleyConvenience StoreDay Care CenterGolf CourseAnchored Strip CenterRestaurantMarinaWarehouseFuneral Home
Resources
BlogCurrent Mortgage RatesForms and TemplatesCommercial Property for SaleCommercial MLS GuideGlossaryVideo LibraryApply OnlineHow to Get a CRE LoanFrequently Asked Questions
Calculators
Commercial Mortgage CalculatorCap Rate CalculatorNOI CalculatorDSCR CalculatorLTV CalculatorLTC CalculatorDebt Yield CalculatorYield Maintenance CalculatorInternal Rate of Return Calculator
About Us
About UsLeadershipTeamContactWe're Hiring
Get financing
Newly Published
Mar 17 at Commercial Real Estate Loans
Top 10 Commercial Real Estate Lenders of 2023
Mar 15 at Commercial Real Estate Loans
Top 4 Refinancing Loans for Industrial Real Estate in 2023
Feb 20 at Commercial Real Estate Loans
How to Set Rent Rates for Your Commercial Property in 2023
Explore the Janover Network
Mar 20 at Multifamily Loans
Multifamily Minute Reader Reflections: How Will Bank Failures Impact Multifamily?
Mar 14 at Multifamily Loans
Multifamily Minute Reader Reflections: How Big Are We Buying?
Feb 27 at Multifamily Loans
Multifamily Minute Reader Reflections: When Do You Start the Refi Process?
Was This Article Helpful?
Commercial Real Estate Glossary
Last updated on Feb 19, 2023
2 min read

FNMA: Fannie Mae Mortgage Association in Commercial Real Estate

FNMA, or Fannie Mae Mortgage Association, is a U.S. government sponsored enterprise that focuses on expanding housing opportunities across the United States. To do so, it purchases residential mortgages from lenders and securitizes, or pools them, into mortgage-backed securities. While Fannie Mae does not offer direct commercial real estate loans, investors can rent a certain amount of commercial space if they use an FNMA loan to purchase a multifamily property.

Better Financing Starts with More Options Start Your Application and Unlock the Power of Choice. Click Here to Get Quotes →$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get Quotes
In this article:
  1. What is FNMA in Commercial Real Estate? 
  2. Popular Fannie Mae Multifamily Loans 
  3. Fannie Mae Multifamily Loan Terms 
  4. Freddie Mac® Also Insures Multifamily Loans
  5. Want to learn more? Fill out the form below to speak with a commercial real estate loan specialist.
  6. Related Questions
  7. Get Financing

What is FNMA in Commercial Real Estate? 

FNMA, or Fannie Mae Mortgage Association, is a U.S. government sponsored enterprise that focuses on expanding housing opportunities across the United States. To do so, it purchases residential mortgages from lenders and securitizes, or pools them, into mortgage-backed securities. While Fannie Mae does not offer direct commercial real estate loans, investors can rent a certain amount of commercial space if they use an FNMA loan to purchase a multifamily property. 

For example, apartments purchased with a Fannie Mae DUS loan are permitted to have up to 35% of their property's space occupied by commercial tenants. Or, they can derive 20% of the property's income from commercial sources (whichever is less).

Popular Fannie Mae Multifamily Loans 

Some of the most popular kinds of Fannie Mae multifamily loans include: 

  • Fannie Mae DUS Loans: The most popular multifamily loan program offered by Fannie Mae, the DUS program allows for loans of $3 million or above.

  • Fannie Mae Multifamily Small Loans: These multifamily loans are sized between $750,000 and $5 million, and offer streamlined underwriting and documentation requirements.

  • Fannie Mae Affordable Housing Loans: With a minimum loan size of $1 million, this program is designed especially for properties using the Section 8 Housing Assistance Program (HAP), projects with expiring LIHTC tax credits, or projects using other, specific, affordable housing arrangements.

  • Fannie Mae Senior Housing Loans: With a minimum loan size of $5 million, these loans are available to independent living, assisted living, and Alzheimer’s/Dementia care projects for senior citizens.

Fannie Mae Multifamily Loan Terms 

While terms vary significantly with different loan products, most Fannie Mae Multifamily loans have the following terms: 

  • Leverage: Maximum 80% LTV

  • DSCR: 1.15-1.30 minimum DSCR

  • Recourse: Non-recourse, standard carve-outs apply

  • Loan Term: 5-30 years

Freddie Mac® Also Insures Multifamily Loans

In addition to Fannie Mae, its brother corporation, Freddie Mac, also purchases and insures multifamily mortgages, including some that allow for a degree of commercial property use. For example, properties purchased with a Freddie Mac Small Balance Loan (SBL), can derive up to 40% of their income from commercial rents. 

Want to learn more? Fill out the form below to speak with a commercial real estate loan specialist.

Related Questions

What is Fannie Mae Mortgage Association?

Fannie Mae Mortgage Association, or FNMA, is a U.S. government sponsored enterprise that focuses on expanding housing opportunities across the United States. To do so, it purchases residential mortgages from lenders and securitizes, or pools them, into mortgage-backed securities. While Fannie Mae does not offer direct commercial real estate loans, investors can rent a certain amount of commercial space if they use an FNMA loan to purchase a multifamily property. For example, apartments purchased with a Fannie Mae DUS loan are permitted to have up to 35% of their property's space occupied by commercial tenants. Or, they can derive 20% of the property's income from commercial sources (whichever is less).

In addition to Fannie Mae, its brother corporation, Freddie Mac, also purchases and insures multifamily mortgages, including some that allow for a degree of commercial property use. For example, properties purchased with a Freddie Mac Small Balance Loan (SBL), can derive up to 40% of their income from commercial rents.

What types of commercial real estate loans does Fannie Mae offer?

Fannie Mae offers a variety of loans for commercial real estate, including fixed-rate loans with 5- to 30-year terms, variable-rate loans, and interest-only options. Loan-to-value (LTV) ratios of up to 80% may be permitted. Fannie Mae also allows a certain portion of a property to be leased to commercial tenants, often between 15% and 25%, depending on the specific loan program.

For more information, please see the following sources:

  • Fannie Mae Multifamily Loans
  • Refinancing Commercial Real Estate Loans

What are the eligibility requirements for a Fannie Mae commercial real estate loan?

To be eligible for a Fannie Mae commercial real estate loan, you must meet the following requirements:

  • You must have a minimum loan amount of $1 million.
  • You must be purchasing a multifamily property.
  • You must be able to rent a certain amount of commercial space.
  • You must be able to derive 20% of the property's income from commercial sources (whichever is less).

For more information, please visit www.commercialrealestate.loans/commercial-real-estate-glossary/fnma-fannie-mae and www.commercialrealestate.loans/how-to-get-a-commercial-real-estate-loan.

What are the advantages of a Fannie Mae commercial real estate loan?

Fannie Mae offers a variety of commercial real estate loan products, including Multifamily Small Loans. The advantages of these loans include:

  • Very competitive interest rates
  • Up to 80% LTV allowance
  • Streamlined processing/documentation
  • Capital improvements may be included in the loan amount
  • Most loans are non-recourse
  • Supplemental loans are allowed after 12 months
  • 30- 180 day rate locks available after commitment (extended rate locks also available)
  • No processing fees (except with written approval)
  • Non-recourse loans are assumable with lender approval and a 1% fee

Additionally, Fannie Mae DUS loans permit up to 35% of a property's space to be occupied by commercial tenants, or 20% of the property's income to be derived from commercial sources (whichever is less).

What are the disadvantages of a Fannie Mae commercial real estate loan?

Fannie Mae commercial real estate loans have the following disadvantages:

  • Selective of the properties they will finance.
  • Require financially strong borrowers.
  • Less autonomy in the operation of the property and limited flexibility to deviate from the terms of the loan documents.
  • Difficulty in releasing collateral.
  • Expensive to exit.
  • Lock outs often prevent prepayment or up to two years.
  • Reserves required.
  • Secondary financing (i.e. mezzanine debt or preferred equity) not always allowed.

Source: www.multifamily.loans/freddie-mac-multifamily-loans and www.multifamily.loans/multifamily-cmbs-loans

In this article:
  1. What is FNMA in Commercial Real Estate? 
  2. Popular Fannie Mae Multifamily Loans 
  3. Fannie Mae Multifamily Loan Terms 
  4. Freddie Mac® Also Insures Multifamily Loans
  5. Want to learn more? Fill out the form below to speak with a commercial real estate loan specialist.
  6. Related questions
  7. Get Financing
Categories
  • Commercial Property Loans
  • CRE Loans
Tags
  • Commercial Mortgage
  • commercial real estate loans
  • Commercial Property Loans
  • FNMA
  • Fannie Mae
  • Multifamily Loans
  • Apartment Loans

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

Commercial Real Estate Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

hello@commercialrealestate.loans

Commercial Real Estate Loans

Eligible Property Types
Mortgage Rates
Commercial Loan Calculator
Glossary

Site Information

Privacy Policy
Terms of Use

This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

Copyright © 2022 Janover Inc. All rights reserved.