Apartment Loan Rates

Other Rates

• Commercial Loan Rates
• Current Index Rates

Conventional

Conventional mortgages are loans offered by FDIC-insured institutions such as banks or credit unions. They typically require a personal guarantee and an underwriting of the global cash flow of the guarantors, including personal and business tax returns. This loan product can be used for investment or owner-occupied properties.

Loan Amount $1,000,000+
* Not available for all properties in all markets
** Priced on a per-transaction basis

Private Banking

Private Banking is provided to offer Borrowers with high net worth and liquidity preferred terms and discounted interest rates. In order to provide this service the lender might request a depository or a private wealth management relationship with the loan Sponsors.

Loan Amount $1,000,000+
* Not available for all properties in all markets
** Priced on a per-transaction basis
*** Borrowers must qualify for the Private Banking relationship program. Principals must have >$3Million liquid assets and >$10Million net worth

CMBS

Also known as a conduit mortgage, this product is a non-recourse loan provided by a financial institution that funds the loan, then securitizes it with a pool of other loans that are converted into bonds collateralized by the underlying real estate. It is a good product for those needing underwriting standards that are more flexible than the agencies (Fannie & Freddie), LifeCos, or banks.

Loan Amount $2,000,000+
* Not available for all properties in all markets

Fannie Mae

This is a non-recourse multifamily loan product for loan amounts starting at $750,000 in primary MSAs and $1,000,000 in secondary MSAs. It requires previous multifamily experience unless a waiver is attained. Tertiary markets are only considered on an exception basis and would also require a waiver. If more than two waivers are required by any one loan request, the loan will almost certainly be declined by Fannie.

* Not available for all properties in all markets
* Small Loan Program: The Small Loans product is for the purchase or refinance of existing, stabilized properties with 5-50 units and loan amounts between $750,000 - $5 million ($7 million in eligible markets*).

Freddie Mac

This loan product is very similar to a Fannie loan is almost all respects; it is non-recourse (outside of the standard “carve-out” clauses), and is for experienced investors with properties in major markets. The main difference between this product and Fannie is the available term and prepayment penalty structures structures (i.e. fixed-to-floating hybrid, step-down prepayment penalties available).

Standard Rates

SBL Rates

FHA

Many borrowers don’t realize that FHA loans can also be made on multifamily properties in addition to residential homes. The multifamily product is a non-recourse, large-balance mortgage product that is federally guaranteed by the Federal Housing Authority’s Department of Housing and Urban Development (HUD). It is a very good option for experienced investors with large-scale buildings and higher loan amounts. Substantial multifamily experience or previous HUD ownership/management experience is required for this program. It may be used for construction or existing properties.

USDA

Although it can be made directly in some circumstances, a USDA multifamily loan is typically made by a financial institution, then guaranteed by the US Department of Agriculture. It is targeted toward low-income, elderly and disabled individuals. This product may be used for the acquisition or construction of multifamily housing in eligible rural areas with populations of 50,000 or less.

Loan Amount $1,000,000-$25,000,000
* Not available for all property types
** Priced on per-transaction basis

Insurance

Offered by insurance companies (typically life insurance), this is the most conservative of all the mortgage products, but many times offers the lowest interest rates; most insurance lenders prefer newer, high-quality properties at low leverage in major markets and very experienced investors and requires that you go through a correspondent like Commercial Loan Direct. This product is typically used for stabilized properties, but may be used for construction in limited circumstances.

Loan Amount: $5,000,000
* Not available for all property types

Bridge

These are shorter-term loans used for the limited renovation and/or re-stabilization of a distressed, under-performing, or vacant property. Because bridge loans are only used for riskier projects, they have higher interest rate loans than most other loan products. After the work is completed and the property is fully stabilized, the borrower can refinance into one of the more conventional, lower-interest rate loan products mentioned in this section.

Loan Amount: $1,000,000+
* Not available for all property types or areas; may calculate using LTC instead of LTV
** Interest-Only

Construction

With terms between 12-36 months, construction loans are used for substantial rehabilitation, re-development, or acquisition and development of a brand new property. After the construction is completed, the loan will either be refinanced into a permanent product or rolled over into a permanent loan (called “construction to perm”) with the same lender. These rates can range substantially depending on the lender, property type, market, and loan product.

Loan Amount: $3,000,000+
* Not available for all property types or areas; may calculate using LTC instead of LTV
** Interest-Only

Mezzanine (“mezz debt”)

Typically used in conjunction with a CMBS or private money loan, a mezzanine loan is a debt-equity hybrid security that is put into a second-lien position (behind another “senior secured” lender). These are used when the borrower needs additional leverage to finance a specific piece of commercial real estate. It can be used for both either the acquisition or refinance of an investment property.

Loan Amount: $1,000,000+
* Not available for all property types or areas
** Usually used in conjinction with CMBS loans, following the same underwriting standards

Hard Money

Hard Money Loans are offered by private investment institutions for the financing of properties that are not “bankable” due to borrower credit issues, property issues, or other reasons. Because of the extremely high interest rates (typically 12%+), we don’t recommend using this product unless the Borrower has significant experience with this type of loan and can refinance out or sell the property within a short, set time frame.

Apartment Loan FAQs

What is Multifamily Lending?

Multifamily lending is the equivalent of apartment lending. Multifamily loans are made on properties that have at least 5 apartment units and are zoned commercially, whereas single family loans are made on properties with 4 units or less. If a property has a commercial component (i.e. retail store) and 4 units or less, the property would be considered “mixed use” and would need to be financed on a commercial loan rather than a multifamily loan.

How Much Down Payment Do I Need for an Apartment Loan?

The required down payment will ultimately depend upon the property’s cash flow, DSCR, and multifamily loan product chosen, but you should plan on putting at least 25% down on a property for purchase. One exception to the 75% loan-to-value is through the Fannie and Freddie multifamily programs; for buildings in primary markets with sufficient cash flow on the property, the agency programs can go up to an 80% LTV (i.e. 20% down payment).