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  4. What is the difference between Fannie tier 3 and tier 4?

What is the difference between Fannie tier 3 and tier 4?

Short answer

Tier 3 caps at 65 percent LTV and 1.35x DSCR ; tier 4 caps at 55 percent LTV and 1.55x DSCR. Tier 4 saves an additional 10 to 25 basis points of spread compared to tier 3 but requires meaningfully lower leverage and stronger DSCR. Most market-rate borrowers stop at tier 3.

Who chooses tier 4?

Long-hold institutional sponsors prioritizing duration cash-flow stability over leverage maximization. Insurance-investor-backed multifamily portfolios where prudent leverage thresholds align with tier 4 limits. Some affordable-housing executions where mission-driven sponsors accept lower proceeds for superior pricing.

Sources

  1. Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current

Keep reading

What is tier pricing on Fannie agency multifamily loans?

Fannie DUS uses four pricing tiers (1 to 4) based on LTV and DSCR thresholds. Lower tiers carry tighter pricing and can step down meaningfully if a deal.

What is a Fannie Mae DUS loan?

DUS. Delegated Underwriting and Servicing, is Fannie Mae's primary multifamily lending program. A Fannie-approved DUS lender originates and shares loss risk.

How do Fannie DUS and Freddie Optigo prices compare?

Fannie DUS and Freddie Optigo trade within 5 to 15 basis points of each other on most multifamily loans. Pricing depends on tier, mission/affordability layer.

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