Fannie Mae vs. Freddie Mac Multifamily Loans

What "agency" actually means

Fannie Mae and Freddie Mac are government-sponsored enterprises that buy or guarantee apartment loans originated by their licensed lender networks (Fannie Mae DUS lenders and Freddie Mac Optigo lenders). Because the loans are made to a national standard and carry the agencies' guarantee once securitized, agency debt is the deepest and most consistent source of multifamily financing in the country. It is available in every market, in every cycle, at pricing banks struggle to match on stabilized assets.

Neither agency lends directly. Every agency loan runs through an approved lender, and the same deal can price and structure differently depending on which lenders quote it and under which programs. That is why competing the execution matters as much as choosing "agency" in the first place.

Where they overlap

For most stabilized apartment deals, both agencies offer broadly similar core terms: loans from roughly $1 million with no practical upper bound, leverage up to about 80% in top markets, minimum DSCR around 1.25x, fixed terms from 5 to 30 years with amortization up to 30 years, interest-only periods for lower-leverage deals, and non-recourse structures with standard carve-outs. Both offer dedicated small-balance programs, green and affordable incentives, and supplemental loans that let you add debt later without refinancing.

Where they differ

The differences show up in the details, and the details move with the market. A few that regularly decide the choice:

• Prepayment flexibility. Yield maintenance is standard on both, but step-down prepay options are more accessible on certain Freddie Mac small-balance structures. If you may sell mid-term, this can be worth more than a few basis points of rate.
• Rate lock timing. Early or extended rate-lock mechanics differ by program and lender, which matters in a volatile rate environment.
• Market tiering. Both agencies tier leverage and pricing by market. The same property can be a top-tier deal for one agency and a lower tier for the other, changing achievable proceeds.
• Program fit. Mission-driven housing, workforce housing, and affordability set-asides are priced and credited differently, and those programs change year to year.

How to choose

You generally do not choose an agency; you choose among quotes. The practical approach is to size the deal under both agencies' current programs, run the quotes against bank, credit union, and life company alternatives, and let the market decide. Sometimes the winner is not agency at all: credit unions without prepayment penalties or life companies at lower leverage and tighter spreads can beat agency for particular business plans.

Our desk runs exactly that process on agency multifamily deals from about $1 million and up. If you want a read on where your deal prices today, send us the basics and a senior advisor will size it across executions.

For program-level depth, our affiliated publishing site Multifamily.loans maintains standing guides to Fannie Mae multifamily loans and Freddie Mac multifamily loans.

General information, not financial, legal, or tax advice. Program parameters change over time; actual terms are set by lenders at quote. See our Terms of Use.