Fannie Mae’s Hybrid ARM offers small loan borrowers flexible, long-term financing with attractive prepayment options, and competitive pricing.
Conventional Small Mortgage Loans and Manufactured Housing Communities
Up to $6 million in all markets
7- or 10-year fixed-rate term followed by 23- or 20-year adjustable-rate term
Yield maintenance and graduated prepayment options available.
Completely open prepayment during the adjustable rate period.
Up to 30 years
Debt Service Coverage
1.25x minimum DSCR
Loan to Value
Up to 75% maximum LTV for refinances and 80% for acquisitions
Index during adjustable rate term
Margin during adjustable-rate term
0.80%, plus the Guaranty Fee Rate and the Servicing Fee Rate in effect at Rate Lock.
Maximum interest rate during adjustable-rate term
Starting with the conversion from the fixed interest rate to the adjustable interest rate and thereafter, maximum semi-annual interest rate adjustment of 1% up or down. Maximum lifetime interest rate to Borrower capped at 5% over the initial fixed rate.
Lifetime floor during adjustable-rate term
During the adjustable-rate term, the interest rate will never be less than the Margin
Properties must demonstrate a minimum occupancy of 90% for a 12-month period prior to commitment, with 90% for 90 days available on a case-by-case basis.
Net Worth & Liquidity
Net worth equals to the loan amount and liquidity equal to 9 months P&I required.
Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy
Taxes & Insurance Escrows
Required for Tier II business and generally not required for Tiers III and IV
Replacement Reserve Escrows
Generally, not required for qualifying Borrowers
Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience
Supplemental Mortgage Loans are not available
45-60 days from complete application to commitment