Fannie Mae Increases Access for Small Loans Program

June 03, 2024

Fannie Mae Increases Access for Small Loans Program

Fannie Mae’s Small Loan Program plays an integral role in the multifamily market, providing a financing option for owners of smaller rental properties and contributing more than $24 billion of liquidity to this market since 2009.

According to Fannie Mae, “Owners of smaller properties have specific financing needs, and the Fannie Mae Multifamily Small Loan program has product offerings designed to meet those needs. Loans to smaller rental properties play a unique role in the rental housing market: the properties tend to be more affordable, and concentrated in urban areas in close proximity to transportation and jobs making them a key source of housing for working families.”

Recently, Fannie Mae expanded the unpaid balance (UPB) limits of their Small Loan Program from $6 million to $9 million and maintained many of the reduced due diligence requirements and streamlined underwriting processes available for loans under $6 million.  

Today, Fannie Mae is offering very competitive pricing for loans between $6 million and $9 million with qualifying mission-driven parameters and at lower leverage. These enhancements to the Small Loan program offer the following advantages:  

  • Attractive Pricing: Up to an 80 basis points reduction in pricing for loans with Loan-to-Value ratios at or below 65% and qualifying units with affordability
  • Lower Liquidity Requirements: 9-month P&I versus the standard 10% of the loan amount 
  • Simplified Underwriting: Reduced underwriting for limited partners with less than 50% ownership, compared to 25% for conventional Fannie Mae loans 
  • Cost Savings: Reduced legal fees and streamlined 3rd party reporting; limited or no radon testing requirements 
  • Customized Financing Options: Up to a 2% rate buydown along with partial to full-term interest-only options available 

Greystone was the #1 Fannie Mae Small Loans producer for 2023 volume, so we understand the nuances of the program and how to execute on behalf of our clients,” said Andrew Remenschneider, a Director at Greystone. “We remain committed to working with Fannie Mae on these critical transactions in support of their mission-driven goals, and helping our clients secure the long-term financing they need to help them achieve their goals.”