Permanent multifamily debt from the GSEs — the cheapest money in the market.
An agency loan is a multifamily mortgage issued through Fannie Mae, Freddie Mac, or HUD/FHA programs. Agency loans typically offer the lowest rates in the commercial real estate market because they're backstopped by the federal government — making them the gold standard for stabilized multifamily acquisition and refinance.
Agency loans dominate the multifamily debt market because Fannie Mae and Freddie Mac are mandated to provide liquidity for multifamily housing, and they back their lending with the federal government's implicit guarantee. The result: agency rates are typically 25–75 bps tighter than CMBS, with higher LTV allowances, lower debt yield thresholds, and meaningfully more flexible covenants.
Three main agency programs cover most multifamily lending: Fannie Mae DUS (delegated underwriting) for $1M+ multifamily; Freddie Mac Optigo (including the Small Balance Loan program for $1M–$7.5M) for the same; and HUD/FHA 221(d)(4) for construction and 223(f) for stabilized refi. Each has slightly different rate, term, and covenant profiles.
Agency loans are non-recourse (with bad-boy carve-outs) and typically 10-year fixed with 30-year amortization, though shorter terms (5, 7) and longer (12, 15) are available. Prepayment is yield maintenance for most of the term, stepping down in the final 3–6 months. Mission-aligned properties (affordable housing, green building, workforce housing) often qualify for rate reductions and higher proceeds.
Compared to CMBS, agency offers: lower rates, higher LTV, lower debt yield thresholds, more flexibility on modifications, and faster execution (45–75 days vs. 75–120). The trade-off: agency lending is multifamily-only — no retail, office, industrial, hospitality. If the asset is multifamily and stabilized, agency is almost always the right perm execution.
| Appraised value | $7,200,000 |
| Stabilized NOI | $486,000 |
| LTV test (80% max) | $5,760,000 |
| DSCR test (1.25 @ 6.05% / 30-yr) | $5,920,000 |
| Debt Yield test (7.5% min) | $6,480,000 |
| Binding constraint: LTV | $5,760,000 |
| Final loan amount | $5,760,000 |
| Implied rate | ~6.05% / 10-year fixed / 30-yr amort |
Both are GSE multifamily programs with similar terms. Fannie DUS lenders have delegated underwriting authority; Freddie Optigo has slightly different prepayment options and a stronger small-balance program (SBL). In practice, the rate and term differences are small and pricing is often competitive between the two.
Freddie SBL goes down to $1M; Fannie's small-balance program is similar. Below $1M, agency execution becomes uneconomic and borrowers typically use DSCR or portfolio lenders instead.
Generally no on the value-add stage — agency requires stabilization. But agency is typically the perm takeout once your bridge or value-add capital lifts the property to stabilization.
Yes, with standard bad-boy carve-outs (fraud, misrepresentation, environmental, voluntary bankruptcy, ARO). Same structure as CMBS non-recourse.
Typically 25–75 bps tighter. For a $10M loan, that's $25k–$75k of annual interest savings — meaningful enough that agency is almost always the right call for stabilized multifamily.
Matrix structures bridge and value-add multifamily debt designed to refinance into agency perm. We work with the leading agency originators to make sure the bridge sets up the takeout.
