$16B increase to agency caps should benefit small multifamily investors
October 13, 2021
Multifamily purchase caps limit the amount of capital Fannie Mae and Freddie Mac can lend on an annual basis through their multifamily loan programs. As a result, the caps serve as a key driver to the competitiveness of their loan terms, such as interest rates, including those offered through their multifamily small loan programs.
FHFA announces an increase in multifamily loan purchase caps
Today, the Federal Housing Finance Agency (FHFA) announced the 2022 multifamily loan purchase caps for Fannie Mae and Freddie Mac. Each agency will be capped at $78 billion, an $8 billion increase over their 2021 caps.
To ensure a focus on traditionally underserved markets and properties that provide affordable housing, the FHFA is also requiring that at least 50% of this multifamily business meet its definition of “mission-driven” affordable housing.
Another 25% must be affordable at or below 60% of area median income (AMI), up from 20% in 2021. Additionally, the FHFA is updating their definition of “mission-driven” business which includes an increase in the portion of loans on small multifamily properties (5 – 50 units) that will qualify.
How could these changes benefit small multifamily investors like you?
- An increase to multifamily purchase caps means that Fannie Mae and Freddie Mac will have a greater supply of capital to lend in 2022 and will do so by offering competitive loan terms for multifamily properties, both large and small.
- Given the affordable nature of smaller multifamily properties, as well as the more favorable qualification of small loans as “mission-driven” business, Fannie Mae and Freddie Mac should be incentivized to focus on small loan business to ensure they meet or exceed the increased targets for affordable housing in 2022.
More positive momentum heading into 2022
This favorable announcement comes on the heels of a proposed 130% increase to the FHFA’s housing goal related to 5-50 unit properties, which should also bode well for the competitiveness of Fannie Mae and Freddie Mac’s small loan programs throughout 2022 and beyond. In fact, we’re already seeing more competitive terms from Fannie Mae, which decreased their small loan interest rates by almost 0.50% just this week.
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With nearly 15 years of experience in finance, commercial real estate, and multifamily lending, Chris leads our MultiFi team to provide the best solutions tailored to your unique situation and goals. Chris and the MultiFi team have set out to create the future of multifamily lending, striving to empower borrowers like you with the knowledge, transparency, and expertise to get more out of your multifamily investment.
Prior to launching MultiFi, Chris was responsible for the initial underwriting and quoting of over $26 billion of potential Fannie Mae multifamily production. Chris was also instrumental in launching Berkadia’s Fannie Mae's Small Loans program and Freddie Mac’s Optigo® Small Balance Loans Program. He served as Head of Small Loan Originations, where he managed over $575 million in small loan production, in conjunction with being the Product Manager for Berkadia's multifamily lending technology initiative. Chris's unmatched experience with multifamily financing and innovation gives MultiFi an edge in providing you with the optimal solutions and experience.Read more by Chris Philipps