Fannie Mae Affordable Housing Preservation Financing

Fannie Mae Financing Designed to Preserve the Availability and Affordability of Subsidized Rental Housing

Investors interested in financing subsidized multifamily rental housing properties might find the Fannie Mae Affordable Housing Preservation Loan to be of great use. Properties with affordability components such as Low-Income Housing Tax Credits (LIHTC), HUD Section 8 Housing Assistance Program (HAP) contracts, or other similar government housing subsidies are all perfect candidates for the program, which is designed to entice investors to keep their properties affordable for low-income tenants. Fannie Mae Affordable Housing Preservation Loans Have terms between 5 to 10 years with amortizations of up to 35 years, a maximum LTV allowance of up to 80%, and a minimum 1.20x DSCR limit. To further sweeten the deal, these loans are fully assumable (with lender approval) and are non-recourse.

2021 Sample Fannie Mae Terms For Affordable Housing Preservation Loans

Size: Varies

Terms: 5-30 years, must end at the same time as the original mortgage loan

Amortization: Up to 35 years

Interest Rates: Fixed and variable-rate loan options available

Maximum LTV: Up to 80%, 75% for cash-out refinances

Minimum DSCR: As low as 1.20x for fixed-rate properties

Recourse: Loans are non-recourse with standard “bad boy” carve-outs

Prepayment Penalty: Yield maintenance and declining prepayment premium options available

Third-Party Subordinate Debt: Allowed under certain circumstances: hard debt must be issued by a non-profit, public, or quasi-public entity and combined DSCR cannot go below 1.05x, while soft third-party subordinate debt payments cannot exceed 75% of property cash flow "after payment of senior liens and property operating expenses"

Eligible Properties:

Eligible properties include:

  • Expiring Low Income Housing Tax Credit (LIHTC) deals
  • Properties refinancing existing tax-exempt bonds
  • Rental Assistance Demonstration (RAD) eligible properties
  • HUD Section 8 Housing Assistance Program (HAP) Contract properties
  • Loans insured under Sections 202 or 236 of the National Housing Act
  • Properties with existing Rural Housing Service (RHS)/Rural Development (RD) Section 515 and RD Section 538 Loans

Plus, properties must meet low-income restrictions by:

  • Having at least 20% of the project's units rented to families earning less than or equal to 50% of the Area Median Income (AMI), or:
  • Having at least 40% of the project's units rented to families earning less than or equal to 60% of the Area Median Income (AMI), or:
  • Section 8/Project-Based Housing Assistance Payments for at least 20% of the project's units

Assumability: Loans are typically assumable with lender approval


  • Competitive interest rates
  • Loans are non-recourse
  • 30-180 day rate locks (streamlined rate locks also available)
  • Supplemental financing is allowed
  • Third-party subordinate debt allowed under certain circumstances


  • Requires third-party reports including a Property Condition Assessment/Physical Needs Assessment, an Appraisal, and a Phase I Environmental Assessment (may not be required in certain circumstances)
  • Typically requires a $15,000 processing fee (which includes major third-party reports and lender due diligence)
  • Typically requires replacement reserves of $250/unit per year
  • 2% rate lock fee (refunded at closing)