Fannie Mae DUS multifamily loans

The one-line rule for sizing a DUS loan

At full leverage the two DUS limits work as a pair: the loan can be no larger than the loan-to-value cap allows, and no larger than the debt service the income covers at the minimum DSCR. Because the leverage cap and the coverage floor multiply to one at full leverage (80% max LTV and 1.25x min DSCR), there is a quick test: if the property’s cap rate is below the loan constant, coverage limits the loan; if it is above, loan-to-value does. The constant moves with the note rate and the amortization, so check it against your own cap rate before you assume the loan-to-value cap is the number that matters.

Worked example (illustration)

An illustration, not a quote: a stabilized 120-unit property worth $20,000,000 with $1,250,000 of underwritten net operating income, priced at an illustrative 6.30% note rate on a 30-year amortization.

Test	Arithmetic	Loan it allows
Loan-to-value	$20,000,000 x 80%	$16,000,000
Debt coverage	$1,250,000 / 1.25 = $1,000,000 of annual debt service; divided by the 7.43% loan constant	$13,463,000
Loan	lower of the two	$13,463,000 (67% LTV)

The coverage test binds by $2.5 million. The property’s cap rate (6.25%) is below the 7.43% constant, which is what the one-line rule predicts. On these numbers the balance after ten years of payments is about $11,356,000, the balloon to refinance or pay off at maturity. Run your own numbers in the DSCR calculator or the commercial mortgage calculator.

Interest-only can lower the payment, but ask the lender how it tests coverage during the interest-only period before you count on more proceeds. The one lever Fannie Mae publishes for more proceeds is Green Rewards: up to 5% more loan proceeds than a non-green DUS loan³, because 75% of owner-projected and 25% of tenant-projected savings count in underwritten NCF³.

DUS executions by property type

DUS is a lender platform, not one product. The conventional term sheet sets the base case; the specialty executions change the box. This table is the quickest way to see whether your property has a DUS home.

Execution	Key limit	Coverage	What makes it different
Conventional	80% max LTV1	1.25x min DSCR1	5+ units; 50+ pad sites for manufactured housing communities2
Small Loans	up to $9 million nationwide4	1.25x min DSCR4	Streamlined inspection and environmental screening (ASTM E-1528-14) instead of full reports4
Manufactured housing	80% max LTV5	1.25x min DSCR5	Quality Level 3, 4 or 5 communities only5; Park-owned homes generally 25% max; up to 35% with a plan to reduce5
Seniors housing	75% max LTV6	1.30x if over 50% independent living6; 1.40x if over 50% assisted living and/or memory care6	Operator experience is underwritten alongside the real estate
Student housing	75% max LTV7	1.30x fixed; 1.05x variable (subject to fixed-rate test)7	Student Housing: 40%+ of units leased to students; Dedicated: 80%+7
Near-stabilization	$10 million minimum; 75% physical occupancy at rate lock8	Tier-based	Locks before the property reaches full stabilization
Supplemental	as high as 70% LTV, depending on asset class and use of proceeds9	as low as 1.30x9	available 12 months after the senior loan closes9

Fannie Mae’s full tier grid (the leverage and coverage at each step below full leverage) sits in its guide and lender pricing tools, not on a public term sheet, so this page does not restate it.

What sets the price

Fannie Mae does not publish a spread, and every DUS lender quotes its own. Four things move the quote more than anything else:

1. Leverage tier. Each step down in loan-to-value buys a tighter spread. The rate tile on this page shows a dated indication from low to full leverage; the gap between the two ends is the price of the last tier of proceeds.
2. Term. Longer fixed terms usually price wider, and they carry a longer prepayment premium.
3. Mission credit. FHFA caps each Enterprise’s 2026 multifamily purchases at $88 billion each for Fannie Mae and Freddie Mac (2026)¹⁰, and requires at least 50% mission-driven¹¹. Workforce housing loans are excluded from the 2026 caps¹⁰. A loan whose rents fall within the affordability bands (for example, 80% of AMI or below (standard markets)¹¹ in a standard market) helps the lender meet that goal, and lenders compete harder for it.
4. Rate lock timing. Fannie Mae offers 30- to 180-day rate lock commitments². A longer lock costs more and needs a larger deposit: 2% deposit for locks up to 90 days; 3% for 91 to 180 days¹². A faster lock exists too: Index-only lock for repeat sponsors with a Fannie Mae deal in the last 24 months¹³.

For the market context, CBRE’s survey put the average multifamily spread at 162 bps¹⁴ across all lender types in Q2 2026, against 204 bps¹⁴ for commercial property.

Prepayment: yield maintenance or a declining premium

You choose the prepayment structure at rate lock, and it is the single most expensive decision in a DUS loan if you sell early. Yield maintenance on fixed-rate loans; declining prepayment premium on variable-rate loans¹.

• Yield maintenance compensates the investor for the coupon it loses. Fannie Mae’s formula is YM = principal prepaid x (note rate minus Treasury yield) x [1 - (1 + r)^(-n/12)] / r, with r the Treasury yield and n the months left¹⁵, and Fannie Mae discounts at the interpolated Treasury constant maturity yield from Fed H.15, with no added spread¹⁵. Fannie Mae loan documents generally set the premium before the Yield Maintenance Period End Date at the greater of 1% of the balance or yield maintenance¹⁶.
• Declining premium (step-down) is a flat percent of the balance by loan year, for example 10-year fixed: 5-5-4-4-3-3-2-2-1-1, no lockout¹⁷. Lenders usually price it a little higher than yield maintenance.
• After yield maintenance ends: Usually 1% of the balance, on a full prepayment between the Yield Maintenance Period End Date and the open period¹⁶. Near maturity: Typically no premium on a full prepayment from the last calendar day of the fourth month before the maturity month¹⁶.

Prepayment illustration

Continuing the illustration: the $13,463,000 loan at 6.30% has about $12,574,000 left after five years. Assume the owner sells early in loan year six, the matching Treasury yield then is 4.50%, and yield maintenance runs to the end of year ten (actual end dates are set loan by loan, often a few months earlier).

Structure	Arithmetic	Premium
Yield maintenance	$12,574,000 x (6.30% - 4.50%) x present value of 60 months at 4.50%	about $994,000 (7.9%)
Declining premium	$12,574,000 x 3% (loan year six on a 5-5-4-4-3-3-2-2-1-1 schedule)	about $377,000

Yield maintenance shrinks when Treasury yields rise toward the note rate and grows when they fall. If there is a real chance of a sale before year seven, price both structures before you lock. The prepayment calculator runs both.

What the DUS lender checks

DUS lenders carry part of the loss on every loan they sell to Fannie Mae, which is why their underwriting is careful and fairly uniform. Expect them to verify:

• Trailing income, not pro forma. Underwritten NOI starts from the trailing operating statements and the current rent roll, with vacancy, concessions and bad debt taken at their actual level or a market floor, whichever is worse.
• Stabilization. Stabilized occupancy, typically 90% for 90 days before funding², with the rent roll tied to bank deposits.
• The borrower entity. Single-asset U.S. borrower with U.S. ownership; indirect foreign ownership possible with proper structuring². Key principals sign the carve-out guaranty and are checked for net worth, liquidity, credit and prior defaults.
• Physical and environmental. Fannie Mae loans require a Phase I ESA of the entire property under the current ASTM E1527¹⁸, plus a property condition assessment that sets the repair escrow and replacement reserves.
• Cash-out equity. On a cash-out refinance, Fannie Mae lenders must document how much hard equity remains after the new loan¹⁹.

Deal killers we see most often

• Concessions and bad debt hiding in the rent roll. A building that looks stabilized on the rent roll but collects less in the bank statements gets sized on collections.
• Below-floor coverage at today’s rates. A loan that sized easily at a lower rate can fail coverage on refinance even at a lower loan-to-value; the one-line rule above shows why.
• Deferred maintenance that becomes a repair escrow large enough to wipe out the cash-out.
• Ownership that cannot be cleared: an undisclosed partner, a foreign owner without a compliant structure, or a principal with an unresolved prior default.
• Too much commercial income in a mixed-use building for the lender to treat it as an apartment loan.

When to look elsewhere

If the property is below the Small Loans cap, compare Fannie Mae Small Loans and Freddie Mac’s small balance product. If you want the highest leverage and can wait for HUD, compare FHA 223(f). If the property is not yet stabilized, a bridge loan first and a DUS takeout later is the usual path. The head-to-head with Freddie Mac is on Fannie Mae vs Freddie Mac.