Fannie Mae Multifamily ARM 7-4 Financing

7-4 Adjustable-Rate Financing for Multifamily Developments insured by Fannie Mae

Fannie Mae Multifamily ARM 7-4 Loans

With a 7-year loan term and a 4% interest rate cap (plus guarantee and service rate fees), Fannie Mae’s Multifamily ARM 7-4 loan can be a flexible and affordable way to finance a multifamily property. This product is perfect for investors looking for a shorter-term loan solution before converting to longer-term financing for their multifamily asset. The 7-4 ARM allows for the conversion to fixed-rate financing anytime between the first day of the second year and the first day of the sixth year of the loan, making it perfectly positioned to help investors through the first few years of ownership.

The Fannie Mae ARM 7-4 has a minimum loan amount of $1 million and a maximum LTV allowance of 80% (75% for cash-out refinances). Following the norm for Fannie Mae multifamily loans, 7-4 ARM loans are mostly (but not always) non-recourse, and non-recourse 7-4 ARM loans are fully assumable (with lender approval and a 1% fee.)

Sample Fannie Mae Terms For ARM 7-4 Loans

Size: $1 million minimum loan amount

Terms: 7 years

Use: Acquisition or refinance of stabilized multifamily properties

Amortization: Up to 30 years

Interest Rate: Based on the 1-month LIBOR

Interest Rate Cap: 4.00% + guarantee fee rate and servicing fee rate, interest rates cannot increase or decrease more than 1.00% per month

MaximumLTV: 80%, 75% for cash-out refinancing

MinimumDSCR: 1.00 (at max. lifetime interest rate)

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

Prepayment Options: Yield maintenance or declining prepayment premiums

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

Fixed-Rate Conversion: The ARM 7-4 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. No pre-payment penalty is due upon conversion to fixed-rate financing.

Timing: Loans typically take between 45 and 60 days from application to closing

Eligible Borrowers: Most lenders and Fannie Mae prefer borrowers to be a single asset Single Purpose Entity (SPE), though a waiver may be available in certain situations.

Eligible Properties:

  • Stabilized properties with 5-50 units
  • Multifamily affordable properties (no size limitations)
  • Manufactured housing communities


  • Competitive interest rates
  • Most loans are non-recourse
  • 30- 180 day rate locks available after commitment (with an additional fee)
  • Loans are fully assumable with lender approval and a 1% fee


  • 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
  • 2% deposit due at rate lock (refunded after Fannie Mae purchases loan, usually around 30 days post-closing)