Fannie Mae Credit Facility Financing

Flexible, Fannie Mae Insured Loans for Property Portfolios on a Cross-Collateralized and Cross-Defaulted Basis

Financing a portfolio of multifamily properties typically requires a high degree of financial flexibility. For investors interested in such an undertaking, the Fannie Mae Credit Facility Financing program is just the right product for the task. Fannie Mae's Credit Facility program provides a minimum of $55 million in financing and loan terms of between 5-15 years in either fixed or variable-rate loan structures, is designed for maturity laddering, and permits LTVs of up to 80%.

Comparable to Fannie Mae Bulk Loans, this program permits both financing expansion and property substitutions. However, the similarities end there. Unlike the Bulk Delivery program, the Credit Facility program allows for the cross-collateralization of loans, which means that more than one property will be used simultaneously as the collateral for a borrower's loan. This equates to a decreased risk for lenders and typically allows borrowers to take out larger loans and gain more flexibility in the financing process. Even so, there is a potential downside to cross-collateralized loans, as they are often also cross-defaulted-- which means that a default on one on loan in the group is treated as a default on one or more of the others.

2021 Sample Fannie Mae Terms For Credit Facility Financing

Size: $55 million minimum, with unlimited capacity for expansion


  • 15-year credit facility, with 5-15 year loans available for maturity laddering.
  • Generally up to 15-year terms for fixed-rate loans, and 5-year terms for variable-rate loans (extensions may be available for a fee.)
  • Up to 30 years for fixed or variable rate tax-exempt bond credit enhancement.

Interest Rates/Amortization:

  • Fixed and variable-rate loan options available
  • Fixed-rate loans generally have 30-year amortizations
  • Variable-rate loans are generally structured ARMs
  • Variable-rate loans typically require that the borrower purchases an interest rate cap (or other hedging arrangements to reduce borrower risk)
  • For tax-exempt bonds, variable-rate loans can use a principal reserve fund instead of actual amortization

Fixed-Rate Conversion: Variable-rate options can be converted to fixed-rate (either in whole or part). If only part of the loan is converted to fixed-rate, a $25 million variable-rate portion must remain.

Maximum LTV: 80%

Minimum DSCR: 1.20x (depends on asset class and product type)

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

Covenants: Are often required, may include borrower and corporate sponsor liquidity and net worth agreements

Prepayment Penalty: Partially pre-payable debt, yield maintenance, and declining prepayment premium options available

Borrower Entity: "A single purpose, bankruptcy-remote entity is required for each borrower and any general partner, managing member, or sole member that is an entity. Borrowers must have common sponsorship."

Eligible Properties: Eligible properties include standard multifamily properties, student housing developments, and manufactured housing communities

Other Considerations: "Financial and operating covenants and geographic diversity requirements determined on a case-by-case basis."

Structure Options:

  • Single or multiple loans
  • Single or multiple collateral pools
  • No rebalancing required or unused capacity fees

Assumability: For conventional financing, assumption is not allowed on an individual basis, but the entire credit facility can be assumed, with approval. Loans for properties using exempt financing can only be assumed if they are released from the credit facility.


  • Competitive interest rates
  • Loans are non-recourse
  • 30-180 day rate locks (streamlined rate locks also available)
  • Supplemental financing is available
  • Fast closings
  • Expansion allows quick addition of new properties
  • Substitution of properties is also allowed
  • Flexibility allows for the quick sale of properties based on market opportunities


  • Requires third-party reports including Appraisals, Property Condition Assessments, and Phase I Environmental Assessments
  • Due diligence fee of $1500 per property
  • 10 basis points structuring fee on each advance
  • Other fees, including substitution, release, assumption, and review fees, may apply
  • Cross-defaulted loans could mean higher risks for borrowers