Fannie Mae ARM 7-6™
Borrowers can take advantage of Fannie Mae’s ARM 7-6™, a 7-year term loan that offers low-cost financing for the acquisition or refinance of multifamily properties. The initial adjustable interest rate is lower than a fixed rate, with embedded caps and the ability to convert to a fixed-rate mortgage loan during the term of the loan.

Advantages/Highlights

• Low-cost financing with initial interest rates lower than fixed rates
• Maximum interest rate is set at loan origination
• Ability to convert to fixed-rate financing
• Low prepayment penalties

Loan Structure

• Loan amount: $5+ million
• Loan term: 7-year term
• Loan-to-Value: Up to 80% for acquisitions and no cash out refinances, 75% for cash out refinances
• Amortization: Up to 30 years
• Interest-only option available subject to eligibility criteria
• Variable interest rate: ––Adjusts based on changes to 1-month LIBOR and is equal to the index plus a margin (maximum monthly rate adjustment of 1% up or down and maximum lifetime rate ceiling established at rate lock)
• Conversion to fixed rate:
  –– Borrower can convert to a fixed rate at any time beginning on the first day of the second loan year and ending on the first day of the sixth loan year
  ––At the time of conversion, no prepayment premium is charged, minimal re-underwriting is required, no change in the guaranty or servicing fees, and no increase in loan amount
• Prepayment provisions
  ––One-year lock-out followed by a 1% prepayment premium thereafter
  ––No prepayment premium during the last 3 months of the loan term