What lenders care about
Multifamily is the most liquid asset class in commercial real estate, which is good news for borrowers and bad news for advisors who don't run a real process. The DSCR floor is the binding constraint at most agency executions (1.25x for Fannie and Freddie standard programs). Below that, the deal goes to bridge.
Lenders look at trailing performance, in-place rents versus market, expense ratios for the submarket, and concentration risk in any single tenant or unit type. Short-term-rental income is generally underwritten conservatively or excluded.
Where the right capital comes from
For stabilized assets, the agency conversation comes first. Fannie DUS or Freddie Optigo are usually the most competitive option. Smaller deals fit Freddie Mac Conventional Small, generally $2 million to $10 million, or Fannie Mae's small-loan program. Long-duration rate-and-term refinances that need HUD leverage often go to 223(f). Cash-out is 80% of value.
Bridge debt funds are the right answer for value-add and lease-up. Banks and life companies fill in the cases where agency does not fit, luxury, mixed-use with significant retail, and certain student or seniors housing structures.
Typical multifamily loan terms
| Loan type | Potential fit |
|---|---|
| Agency multifamily (Fannie Mae, Freddie Mac) | Stabilized apartments |
| Life company permanent | Low-leverage, long-term holds |
| Bank permanent | Relationship borrowers, flexible prepayment |
| Bridge (debt fund or bank) | Value-add and lease-up |
| Construction (bank) | Ground-up with bank execution |
| Construction (debt fund) | Ground-up needing higher leverage |
Loan proceeds, pricing and terms depend on the property and lender underwriting. Send the property details to discuss financing.
What to have ready
- Trailing 12 months by month and a current rent roll.
- Unit mix with in-place versus market rents.
- Capital expenditures completed and planned, with a budget if value-add.
- Sponsor schedule of real estate owned and a personal financial statement.
Frequently asked questions
What financing options are best for multifamily?
Agency (Fannie, Freddie, HUD) is usually the default for stabilized assets. Bridge debt funds handle value-add and lease-up. Banks and life companies cover deals that don't fit either bucket.
Do you finance value-add multifamily projects?
Yes. Bridge and construction-to-perm structures are core to our work.
What is the minimum size for multifamily financing?
We focus on $5M and above. Below that, it is hard to justify a competitive process.
What DSCR do multifamily lenders require?
1.25x is the standard agency requirement. Banks and debt funds occasionally accept 1.20x for strong assets in core markets.