Multifamily Investors Financing Update

In July, FHA adopted new guidelines that lower the maximum loan to value (LTV) for multifamily market rate loans to 83.3%. Previously this was 85% for acquisition and refinancing on the 223 (f) program and 90% for new construction on the 221 (d)(4) program.

Debt Service Coverage Ratios have been increased to 1.2 for market rate properties.

Affordable and rental assistance properties are somewhat different. For refinancing/acquisition transactions, properties must have an average physical occupancy rate of at least 85% over a six month period. Long term FHA rates remain very affordable, in the 5.2% to 5.5% range for existing properties and somewhat higher for new construction.

Fannie Mae and Freddie Mac multifamily loans recently have ranged from a low of 3.86% for 5 year, 55% LTV loans, up to 4.31% for 80% LTV loans. 7 year loans range from 4.33% to 4.78%, and 10-year loans range from 4.6% to 5.05%.