Bond Credit Enhancement


Fannie Mae provides credit enhancement for tax-exempt multifamily housing revenue bonds that have low and moderate income occupancy restrictions; Fixed rate bonds can be enhanced; Enhancement is rated AAA, and can be used in either a “Refunding” or a “Credit Substitution”

Loan Amount

Minimum $3,000,000

Loan Terms

10 to 30 Years


Up to 30 Years

Loan to Value Maximum

Maximum 85% of conventional appraised value or 80% of “tax exempt” appraisal (with cap rate reflecting tax exempt financing), except in the case of 4% LIHTC in which the maximum LTV increases to 90%

Coverage Minimum

1.25x for fixed rate, except in the case of 4% LIHTC in which the minimum DSCR decreases to 1.15x


Domestic single asset borrowing entity is required

Interest Rate

Risk-based pricing, varies with LTV and DSC ratios

Third Party Reports

MAI appraisal, Physical Needs Assessment, and Environmental Phase I Assessment are required for all deals; Seismic Report is required for properties in Seismic Zone 4; A market study may also be required.


Tax and insurance escrows are required; Repair and Replacement escrow funding is required based on engineer’s Physical Needs Assessment; For loans at less than 65% of value with no deferred maintenance, funding of repair and replacement reserve can be waived, at lender’s discretion

Application and Due Diligence Fees

$2,500 non-refundable Application Fee to cover internal underwriting; $12,500 Due Diligence Fee to cover third party reporting

Origination Fee

Fannie Mae requires minimum origination fee equal to one percent of loan amount; can be reduced for loans over $9 million

Legal Fees

Fannie Mae’s legal fees are estimated at $35,000; Lender’s legal fees are estimated at $25,000


Timing is dependent on type of credit enhancement, status of bonds, 3rd party report timing and borrower’s submission of due diligence

Multifamily Financing Overview

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