Apartment Loan Rates

Apartment loan rates can vary significantly depending on the type of financing you choose. Banks, Fannie Mae, HUD/FHA, and CMBS lenders are the most common types of apartment financing.


Rapidly rising interest rates slowed multifamily investment activity in 2022, but as interest rates stabilize, investors will likely return to the sector.


The Federal Housing Administration oversees a variety of housing-related programs. Its primary mission is to provide borrowers with mortgages through lenders that meet its stringent requirements. This allows the lender to offer the mortgage at a low rate and makes it available to borrowers who would otherwise not be able to get one.

HUD offers several types of loan programs, including the HUD 223(f) apartment construction and refinance program. This provides one of the most flexible, affordable and highest-leverage loans in the multifamily industry, with loan-to-value ratios up to 85% for market-rate properties and higher for nonprofits and those using rental assistance. Additionally, the program features a fixed interest rate and offers one of the longest amortizations in the industry.

FHA loans are also backed by the government, providing lenders with additional security against loan defaults. As such, they are more forgiving when it comes to approval standards and require less documentation than conventional loans. This makes them a great option for those with less-than-perfect credit, or who simply want to save on upfront costs.

Additionally, HUD allows you to purchase a duplex or quadriplex and live in one of the units while renting out the others. This is a popular option for firefighters, teachers and police officers who want to buy homes in low-income neighborhoods at a discount through the Good Neighbor Next Door program.

Fannie Mae Loans

Fannie Mae loans are another option for those looking to purchase multifamily apartments. These loans have strict guidelines that place an emphasis on property condition and market strength, but are also more flexible than FHA/HUD loan requirements.

Fannie Mae is a government-sponsored enterprise (GSE), with a mission of expanding mortgage availability and financing sustainable homeownership for Americans. While it doesn’t directly originate home loans, it purchases mortgages from lenders in the secondary mortgage markets and packages them into mortgage-backed securities (MBS), which it sells to investors. This provides liquidity for lenders to make more mortgages.

Its borrowers include individuals, corporations and financial institutions like banks and credit unions. Fannie Mae loans are eligible for financing multifamily apartment buildings, co-ops and condominiums, as well as single-family homes and manufactured homes attached to a permanent foundation. Fannie Mae allows for 97% loan-to-value ratios on purchase loans, and the company offers a special program for first-time buyers. First-time borrowers are required to attend homeownership education courses, and they must meet income limits set by the Federal Housing Finance Agency.

During the financial crisis of 2008, Fannie Mae was taken over by the US government and placed into conservatorship under the Federal Housing Finance Agency. Today, it’s still an important player in the real estate industry and backs a large percentage of mortgage loans nationwide.

Freddie Mac Loans

The Federal Home Loan Mortgage Corporation, or Freddie Mac, was created by the government in 1970 to expand the secondary mortgage market. Freddie buys mortgages from lenders and pools them into a package called a mortgage-backed security, which it then sells on the open market to private investors. This increases the amount of money available for lending, making it possible for more people to become homeowners.

Freddie Mac also offers special programs that make it easier for certain groups to get a home loan. These include the Home Possible mortgage program, which allows people with limited incomes to purchase a home. There are also Freddie Mac Senior Housing loans, which help seniors buy affordable housing.

Lastly, the Freddie Mac Value-Add loan allows investors to finance the light rehabilitation of multifamily property. This non-recourse loan can be used for both new purchases and refinances. It offers 3-year, interest-only loan terms and up to 85% leverage. Freddie Mac also offers Section 8 financing that helps owners improve affordable properties. This includes project-based subsidies, which give landlords cash payments based on the number of low-income residents living in a particular apartment building, and regular vouchers, which limit rent payments to HUD’s fair market rental rates.

Lenders working with Freddie Mac have access to valuable training and networking events, as well as advanced tools that can help them work smarter. They can also take advantage of the Freddie Mac HomeOne mortgage, which can provide financing for borrowers with less than perfect credit. In addition, Freddie Mac offers a free financial education curriculum for Spanish-speaking borrowers called CreditSmart.