Fannie Mae Flexible Choice Bridge Financing

Financing for Affordable Apartment Buildings and Multifamily Developments Insured by Fannie Mae

FNMA Flexible Vhoice Bridge

Affordable properties are a popular asset in the multifamily industry. Financing an affordable property, however, requires some careful considerations on the investor’s part. While an adjustable-rate loan can be a popular financing vehicle for a multifamily investment, they often times aren’t an appropriate option for a multifamily property with an affordability component. In order to address this, Fannie Mae started the Flexible Choice Bridge program, which includes specialized versions of the Fannie Mae 7-6 ARM and the Fannie Mae Structured ARM, specifically designed to meet the needs of affordable properties.

Like the original versions of the loan programs, the loans under the flexible choice bridge program come with a maximum LTV allowance of 80%, amortizations of up to 30 years, and the option to convert to a fixed interest rate. Aside from non-syndication structured ARMS which must have a minimum loan amount of $5 million, flexible choice bridge loans have no set loan minimum or maximum. Like many Fannie Mae products, these loans are non-recourse and fully assumable (with lender approval and a 1% fee).

2021 Sample Fannie Mae Terms For Flexible Choice Bridge Loans

Size: No minimum or maximum loan amount (however, non-syndication structured ARMs must be $5 million or more)

Terms: 7 years (10-year option for Structured ARMs)

Amortization: Up to 30 years (interest-only options available for eligible borrowers)

Interest Rate: Based on the 1-month LIBOR plus a margin

Interest Rate Cap: Determined at rate lock, interest rates cannot increase or decrease more than 1.00% per month

MaximumLTV: 80%


  • ARM 7-6: 1.00x (at max. lifetime interest rate)
  • Structured ARM: 1.00x (using a variable underwriting rate)

Recourse: Most loans are non-recourse with standard “bad boy” carve-outs for fraud and other bad acts, loans less than $3 million may be recourse in some areas

Prepayment Options: 12-month lockout (6 months with prior approval), then a 1% prepayment premium during the adjustable-rate period, though this is waived for the last three months. Structured ARMs allow a 12 month lockout, followed by a declining prepayment premium, starting at 4% in the second year and going down to 1% per year by the fifth year (where it will stay until the last three months of the loan.)

Occupancy Requirements: 85% physical occupancy, 70% economic occupancy, 90% physical occupancy for loans under $3 million

Commercial Space Limits: Commercial space must be no more than 35% of the net rentable area and must produce no more than 20% of the property's income

Fixed-Rate Conversion: The ARM 7-6 can be converted to a fixed-rate loan on any rate change date between the first day of the second year of the loan and the first day of the sixth year of the loan, without any prepayment penalties. Structured ARMs can be converted to a fixed-rate loan on any rate change date between the first day of the second year of the loan and the first day of the third month before the end of the loan. The amount of the loan cannot increase, but borrowers can apply for supplemental financing.


  • No minimum or maximum loan amount (for ARM 7-6 loans)
  • Competitive interest rates
  • Loans are non-recourse


  • Requires third-party reports including a property appraisal, property condition assessment, and a Phase I Environmental Assessment
  • Requires replacement reserves (minimum of $250/unit per year)
  • $12,500 application deposit and $3,000 processing fee required
  • 1% origination fee also required
  • Does not allow for supplemental financing before conversion to a fixed-rate loan
  • Only 30-day rate lock commitments are available