Life Company vs Agency Apartment Loans Compared

Short answer

Life insurance companies lend their own capital and keep the loan, so they can negotiate terms an agency program cannot, but they usually want lower leverage, strong locations and experienced sponsors. Fannie Mae and Freddie Mac small-loan programs allow up to 80% LTV and take a wider range of buildings. Low leverage on a quality asset favors the life company.

The short version

If you need maximum proceeds, agency debt is almost always the better fit. If you are refinancing a well-located, well-kept building at moderate leverage and you want room to negotiate, get a life company quote next to your agency quotes. The life company may not lend as much, but it may offer terms the agency program cannot.

Life insurers are a meaningful but selective source. The Mortgage Bankers Association counts $269 billion of multifamily mortgage debt held by life insurance companies at the end of the second quarter of 2026, 12% of the total, against 50% in agency and GSE portfolios and MBS.

How each lender works

A life insurance company lends from its general account, the money it invests to pay future policy claims. It usually holds the loan for its full term, so it underwrites for its own portfolio. Each company sets its own appetite for markets, property types, leverage and loan size, and those preferences change with its investment targets during the year.

An agency lender originates to Fannie Mae's or Freddie Mac's published standards and the loan is bought or guaranteed by the agency. Terms are standardized so the loans can be securitized. The program box is wider, but you have less room to move inside it.

Side by side

Term	Life insurance company	Agency (Fannie Mae, Freddie Mac)
Capital	Its own balance sheet, held to maturity	Sold to or guaranteed by the agency
Leverage	Usually lower; varies by company	Up to 80% LTV on Fannie Small Loans and Freddie Conventional Small
Coverage	Usually higher DSCR expectations	1.25x minimum on those small-loan programs
Property fit	Quality buildings in strong locations	Stabilized multifamily across a wide range of markets
Sponsor fit	Experienced owners, strong balance sheets	Published net worth, liquidity and experience tests
Loan size	Each company sets a minimum; some will not do small loans	Fannie Small Loans up to $9 million; Freddie Conventional Small $2M to $10M
Terms	Negotiated; can include longer fixed terms or custom structure	Fannie Small Loans 5 to 30 years
Escrows and reserves	Often negotiable at low leverage	Typically required at higher leverage
Prepayment	Usually yield maintenance	Yield maintenance or a declining premium on Fannie Small Loans
Recourse	Usually non-recourse with carve-outs	Non-recourse with carve-outs
Later proceeds	Negotiated with the same lender	Agency supplemental loans available

The agency column comes from Fannie Mae's published Small Loan term sheet and Freddie Mac's Conventional Small launch. Life company terms are set company by company, so that column is the usual shape of a quote.

Where the life company wins

Negotiation. Because the lender keeps the loan, it can agree to things a securitization does not allow: an unusual rate-lock structure, a release provision, a tailored reserve, or a waived escrow for a low-leverage borrower. You are negotiating with the people who will own the risk.

One counterparty for the life of the loan. Consents, modifications and payoff questions go to the lender that made the loan, not to a servicer acting for bondholders.

Low-leverage pricing. Life companies compete hardest for conservative loans on quality buildings. If you only need 50% to 60% of value, the life company quote can be the strongest on the table. Get the live index from refinance rates and compare spreads quote against quote.

Where the agency wins

Proceeds. At up to 80% LTV and 1.25x on the small-loan programs, an agency loan usually sizes higher than a life company loan on the same building.

Breadth. Agency programs take older buildings, secondary and smaller markets, and smaller sponsors that many life companies pass on.

Small loans. Fannie Mae's Small Loans go up to $9 million, and Freddie Mac's Conventional Small covers $2 million to $10 million. Many life companies set minimums above the size of a typical 5+ unit owner's loan.

Exit options. A declining-premium prepayment and agency supplemental loans give you more ways to take cash out or leave early.

The prepayment question

Most life company loans carry yield maintenance, and some carry a lockout for the early years. If rates fall, yield maintenance can make an early payoff expensive. Before you sign either, price the exit at year three, five and seven against your realistic hold. The prepayment guide explains each formula, and the yield maintenance calculator runs the numbers.

How to compare the quotes

Ask both lenders for the underwritten NOI and the test that limits the loan amount.
Compare net proceeds after escrows, reserves and fees, not gross loan amount.
Compare the spread over the same index on the same date.
Price prepayment at your expected hold, not at maturity.
List the post-closing rules: reporting, consents, transfer and assumption terms.

The term sheet comparison converts quotes to annual debt service and effective cost over your hold. For more on life company lending, read life company apartment loans.

Frequently asked questions

Do life insurance companies make apartment loans?

Yes. Life insurance companies lend from their general accounts and held $269 billion of multifamily mortgage debt at the end of the second quarter of 2026, according to the Mortgage Bankers Association, about 12% of the total. They tend to favor quality buildings in strong locations, experienced sponsors and moderate leverage, and each company sets its own minimum loan size.

Are life company loans cheaper than Fannie Mae loans?

Sometimes, especially at low leverage on high-quality buildings, where life companies compete hardest. At higher leverage, agency loans usually price and size better. Compare quotes on the same index and date, and include fees, escrows and the cost of prepayment over your expected hold, not just the coupon.

How much will a life company lend on an apartment building?

It varies by company and by deal. Life companies generally lend at lower leverage than Fannie Mae and Freddie Mac small-loan programs, which go up to 80% LTV with a 1.25x minimum DSCR. Ask each life company for its maximum LTV, minimum DSCR and minimum loan size for your market before you spend time on a full package.

Are life company loans non-recourse?

Usually, for the loan balance, with carve-out guaranties for bad acts such as fraud, misapplied rents and unpermitted transfers. Terms are negotiated with each company, so read the guaranty in your term sheet and have an attorney review it. Agency loans are also generally non-recourse with similar carve-outs.

Can a small apartment owner get a life company loan?

It depends on the loan size and the building. Many life companies set minimum loan amounts above what a typical small building needs, and they favor strong locations and experienced sponsors. Some regional insurers and correspondents do smaller loans. For loans under $10 million, compare against Fannie Mae Small Loans and Freddie Mac Conventional Small.