Apartment loan rates have been relatively low for the past eight to 10 years, allowing investors to use more leverage and generate positive cash flow. The most common sources of apartment financing are banks, Fannie Mae and Freddie Mac, HUD/FHA and life 후순위담보대출 insurance companies.
Agency lenders offer the lowest apartment loan rates for properties located in major MSAs and Freddie Mac offers the best rates for affordable and student housing.
Community Banks
Community banks are smaller financial institutions that operate on a local scale. They serve customers based on their location and focus on building strong relationships with them. They typically have a lower branch network than larger banks and prioritize the long term interests of their community over short-term capital market demands.
Community bank apartment loan programs are ideal for borrowers with good credit and solid income. These loans are usually only available for 3 – 5 years and don’t allow cash out refinances. For borrowers with less than perfect credit or no income, there are hard money lender apartment loan programs that offer much better rates and terms.
Freddie Mac apartment loan programs offer some of the lowest rates in America for multifamily properties with five units or more. These loans are backed by Fannie Mae which sells the mortgages on Wall Street as security for mortgage-backed bonds. Freddie Mac loan programs can be used for new construction or refinance up to 75% LTV.
Regional Banks
Regional banks tend to be more relationship driven, resulting in a deeper understanding of their clients’ needs. They also have the advantage of offering a variety of different commercial mortgage products and can tailor loan terms to fit your specific property.
Insurance company financing is available for multifamily properties and offers some of the lowest long term apartment loan rates in America. This type of financing is available for financially strong experienced borrowers and can be used to finance stabilized or newly constructed assets.
Banks make up the largest contingent of lenders to apartment buildings, but they are also facing pressure from rising interest rates and an oversupply in certain markets. In addition, many of these banks have a substantial amount of nonperforming CRE loans. When earnings season kicks off this week, investors will want to hear more about the state of regional bank portfolios.
Credit Unions
Credit unions are nonprofit organizations that return their earnings to members in the form of lower rates and fees. They also offer more flexible lending requirements than banks and typically accept a lower credit score.
They provide first-lien mortgage financing for conventional, affordable housing, cooperatives, senior housing and manufactured home parks. They also provide financing for the acquisition and refinance (including cash-out) of multifamily properties nationwide. These loans are nonrecourse, meaning the lender cannot pursue borrowers’ personal assets in the event of default.
This government sponsored enterprise offers some of the lowest apartment loan rates in America. The rate is based on the 5, 7, 10, and 30 year treasury yield plus a margin. This type of loan is perfect for borrowers with bad credit or limited liquidity. It is also a great option for investors who want to avoid paying interest on a balloon payment. However, you must have a good credit report and tax returns to qualify for this program.
Fannie Mae
The Federal National Mortgage Association, also known as Fannie Mae, is a Congressionally chartered company that backs long-term fixed mortgages. The company was created in 1938 to combat a lack of affordable housing following the Great Depression. The government-sponsored enterprise maintains liquidity in the mortgage market by buying mortgages from lenders and allowing them to be sold to investors. Fannie Mae also operates a counseling network and provides educational services on mortgages through its HomePath real estate website.
For those interested in purchasing and renovating multifamily properties, Fannie Mae offers a variety of loan programs that cater to different property types and sizes. Whether you are looking for a traditional 30-year fixed rate loan or a hybrid ARM, Fannie Mae offers competitive pricing and flexible terms. For example, Fannie Mae’s Affordable Housing Preservation Multifamily Loan program is designed to provide financing for the acquisition and refinance of stabilized multifamily properties that meet certain rental restrictions.