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Fannie Mae Expands Declining Prepayment Structure Program

Fannie Mae Multifamily has announced it is expanding its offering of competitively priced fixed-rate mortgage loans that carry the option of a declining prepayment structure for 12-, 15-, 18- and 30-year loan terms. Eligible properties include affordable housing and all conventional properties with between 5 to 50 units.

The declining prepayment structure can benefit borrowers because it allows them to easily calculate prepayment premiums at any time throughout the duration of the loan, giving them predictability in prepayment. Additionally, the program offers competitive pricing.
Fannie Mae has expanded the declining prepayment premium options by adding four executions for longer terms:

  • 12-year loan term: 5-5-5-5-4-4-3-3-2-2-1-1 declining prepayment premium with no lockout period.
  • 15-year loan term: 5-5-5-5-5-5-5-4-4-3-3-2-2-1-1 declining prepayment premium with no lockout period.
  • 18-year loan term: 5-5-5-5-5-5-5-4-4-3-3-2-2-1-1-1-1-1 declining prepayment premium with no lockout period.
  • 30-year loan term: 5-5-5-5-5-5-5-4-4-3-3-2-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1 declining prepayment premium with no lockout period.

Fannie Mae had previously announced the following three prepayment options for loans with shorter terms:

  • 5-year loan term: 5-4-3-2-1 declining prepayment premium with no lockout period.
  • 7-year loan term: 2-year lockout, followed by a 5-4-3-2-1 declining prepayment premium.
  • 10-year term: 5-5-4-4-3-3-2-2-1-1 declining prepayment premium with no lockout period.

For more information on these terms and other Fannie Mae financing options, visit https://www.fanniemae.com/multifamily/index.

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