Fannie Mae Moderate Rehabilitation Financing

Moderate Rehabilitation Loans for Apartment Buildings and Multifamily Properties Insured by Fannie Mae

It isn’t uncommon for a developer or investor to have a multifamily property that is in need of moderate renovations. When it comes to financing the rehabilitation of such a property, the Fannie Mae Moderate Rehabilitation Loan could be the loan product you've been looking for. Fannie Mae Moderate Rehabilitation Loans begin at $10 million and offer LTV allowances of up to 80%.

With terms of between 5 and 30 years, flexible amortizations of up to 30 years, and, even an allowance for supplemental financing through Fannie Mae's Moderate Rehabilitation Supplemental Loan program, it’s hard to find a better product for the moderate rehabilitation of a multifamily asset. Plus, like many standard Fannie Mae products, these loans are non-recourse and are fully assumable with lender approval.

Sample Fannie Mae Terms For Moderate Rehabilitation Loans

Size: $10 million+

Use: Acquisition or refinancing of conventional multifamily properties with at least $10,000 of planned improvements per unit

Terms: 5, 7, 10, and 15-year balloon loans available, 20, 25, and 30-year fully amortizing loans

Amortization: Up to 30 years, interest-only loans are available

Interest Rates: Fixed and adjustable-rate loans available. Fixed-rate loans are based on the associated Treasury Bill, while adjustable-rate loans were based on the 30 or 90-day LIBOR rate (subject to change with upcoming discontinuation of LIBOR index usage)


  • Up to 80% of the lesser of the property's:
    • Stabilized appraised value
    • Purchase price (if purchased in the last 12 months) + value add during renovation + 3% closing costs

MinimumDSCR: 1.25x

Recourse: Loans are non-recourse with standard carve-outs

Rehab Requirements: Property improvements must average at least $10,000/unit

Timing: Borrower will typically receive a commitment 45 to 60 days after initial application; third-party report timing and borrower due diligence submission may speed up or slow down the process

Eligible Borrowers: Borrowers must typically be U.S.-based single asset entities

Prepayment: Options include yield maintenance, defeasance, and declining prepayment premiums

Origination Fees:

  • 1% of the loan amount for loans $9 million or less
  • 0.8% of the loan amount or $90,000 (whichever is greater) for loans more than $9 million
  • Origination fees typically continue to decrease as loans become larger

Assumability: Loans are fully assumable with lender approval and a 1% fee. May also require an additional fee paid to the lender (usually around $3,000)

Other Considerations:

  • Borrowers must sign a Completion Repair Guaranty covering the entire scope of the required rehabilitation work
  • If repairs for the project are more than or equal to $20,000/unit, a Rehabilitation Work Evaluation Report is required
  • Borrowers must submit a Rehabilitation Work Schedule detailing the scope of the planned work, including costs, dates, and allowances for potential cost overruns
  • Borrowers must also create and submit a budget for the planned work, and place funds into a Rehabilitation Reserve Account


  • Competitive interest rates
  • Loans are non-recourse
  • Lower cost than refinancing
  • Not subject to Fannie Mae's "one supplemental loan" rule
  • Loans are fully assumable (with approval and fees)


  • Requires third-party reports including a Property Condition Assessment, Appraisal, and Phase I Environmental Assessment
  • $25,000 application fee typically required (includes third-party reports and underwriting costs)
  • $15,000- $20,000 in legal fees also typically required
  • Rate locks only available after commitment
  • Origination fees required