What is an agency small balance multifamily loan?
An agency small balance multifamily loan is a Fannie Mae or Freddie Mac program for stabilized apartment buildings of five or more units, typically $1 million to $7.5 million, offering 75 to 80 percent leverage, non-recourse terms, fixed rates for five to thirty years, and 30-year amortization. The building needs 90 percent occupancy for 90 days, a 1.20 to 1.25 coverage ratio, and a sponsor with multifamily experience and net worth near the loan amount.
Typical terms
| Term | Typical range |
|---|---|
| Loan size | $1 million to $7.5 million (some programs lower or higher) |
| Leverage | 75 to 80 percent of value |
| Coverage | 1.20 to 1.25 |
| Rate | Fixed, competitive with the best bank pricing |
| Fixed period | 5, 7, 10, or up to 30 years |
| Amortization | 30 years; interest-only years available |
| Recourse | Non-recourse with standard carve-outs |
| Prepayment | Yield maintenance or step-down |
| Occupancy | 90 percent for 90 days before closing |
| Sponsor | Multifamily experience; net worth about equal to the loan; liquidity of 9 to 12 months of debt service |
| Time to close | 45 to 75 days |
Ranges vary by program and market.
What non-recourse means
The lender's remedy on default is the property, not your personal assets, except for carve-outs: fraud, misapplication of funds, environmental issues, and voluntary bankruptcy. For most borrowers that is a meaningful difference from a bank loan with a full personal guarantee.
What qualifies
- Five or more residential units, stabilized.
- Market-rate or affordable; mixed-use is allowed when commercial space is a small share of income.
- Good condition, with any deferred maintenance addressed or escrowed.
- Located in a market the agency covers, with better terms in designated strong markets.
What does not
- Value-add or lease-up deals; agency loans want current income.
- Buildings under 90 percent occupancy.
- Sponsors without multifamily experience or with net worth well below the loan.
- Very small loans; below $1 million most lenders point you to a bank or a DSCR lender.
Costs
Origination of a half to one point, a commercial appraisal, property condition and environmental reports of $5,000 to $10,000 combined, and legal. Replacement reserves are collected monthly. Prepayment is the main cost to understand: yield maintenance can be expensive if rates fall and you sell early; step-down structures are more predictable.
Agency vs bank
Agency wins on non-recourse, long fixed terms, and 30-year amortization. Banks win on flexibility, speed, smaller loans, value-add tolerance, and relationships. Many investors use a bank or bridge loan to stabilize a building and refinance into agency once occupancy and income qualify.
How CommFi handles it
Our lending desk checks occupancy, coverage, and sponsor requirements against the agency programs and prices bank alternatives alongside. It funds direct when it fits, and when an agency lender is the right fit, the desk searches a database of 7,000+ lenders and the agency-approved lenders active in your market compete for the file. Zero upfront fees.
Related reading
Related questions
- What is an agency small balance loan?
- A Fannie Mae or Freddie Mac loan program for stabilized apartment buildings, typically $1 million to $7.5 million, non-recourse with long fixed terms.
- What occupancy do agency loans require?
- Usually 90 percent physical occupancy for 90 days before closing.
- Are agency multifamily loans non-recourse?
- Yes, with standard carve-outs for fraud, misapplication of funds, environmental issues, and voluntary bankruptcy.
- What is the minimum agency loan amount?
- Most lenders start around $1 million. Below that, banks and DSCR lenders are the usual sources.
- Can I get an agency loan on a value-add building?
- No. Agency loans are for stabilized income. Use a bank or bridge loan first, then refinance into agency.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.