A Fannie supplemental loan is a second mortgage layered on top of an existing Fannie DUS senior loan . It lets the borrower pull additional proceeds from a property that has appreciated or grown NOI , without refinancing the existing senior loan and triggering its prepayment.
When does a supplemental make sense?
When the property's NOI has grown enough since the senior loan closed that current sizing supports a higher total loan balance, AND the existing senior is at a rate substantially below today's market rates such that refinancing the whole stack would be expensive (yield maintenance, defeasance, or just losing the rate spread).
The supplemental sizes off the property's current NOI, current cap rate, and current debt-yield/DSCR floors, but the senior loan stays untouched and continues at its original rate.
What are the limits?
Supplementals are subject to Fannie's all-in leverage and debt-yield tests, which include the senior. The combined loan must satisfy DUS sizing at current rates. In a high-rate environment, a supplemental on top of a low-rate senior may produce limited or no incremental proceeds, the combined sizing test is the binding constraint.
Timing: supplementals are typically available 12+ months after the senior closes and at least 12 months prior to the senior's maturity.
Sources
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current
- Multifamily Market Commentary · Fannie Mae Economic & Strategic Research · 2026-Q1