top of page

Fannie Mae

Credit Enhancement For

Fixed Rate, Tax Exempt Bonds

Eligible Properties

Properties that qualify for tax-exempt bond financing, including Multifamily Affordable Housing properties with Low-Income Housing Tax Credit rent restrictions.

Eligible Borrowers

Borrowers may be for-profit corporations, including partnerships (general or limited), joint ventures, and limited liability companies, or non-profit 501(c)(3) or certain governmental public entity borrowers.

Eligible Transaction Structures

Transactions may be structured as new money issues, refundings, or credit substitutions where Fannie Mae takes the place of an existing credit enhancer without the issuance of new bonds.

Credit Enhancement

Fannie Mae credit enhances payment of principal and interest on the bonds or the mortgage loan, which in turn is used to make the required payments to the bondholders. Credit enhancement is provided for up to 30 years.

Loan And Bond Terms

The mortgage loan term must be a minimum of 10 years (15 years for Multifamily Affordable Housing) and a maximum of 30 years. The mortgage and the bonds must have the same maturity date.


Full amortization on a schedule of up to 30 years. (35-year amortization available on a case by case basis for new construction.)


Loan Size

Minimum $3 million. Pools of loans on multiple properties and transaction over $25 million can be financed through a Structured Transaction.

Maximum LTV

For fixed-rate, tax-exempt bonds, the maximum LTV is the greater of 90% of value using a market-rate capitalization rate or 80% of adjusted value (taking into account any added value attributed to the tax-exempt financing).

Minimum DSC

For fixed-rate, tax-exempt bonds, the minimum DSC is 1.15.


Tiered Pricing Matrix.  More favorable terms available for higher DSC and LTV. 

Minimum Occupancy Requirement

90% sustained for 90 consecutive days

Recourse Requirement

Non-recourse execution is generally available with carve-outs for “bad acts” such as fraud.


Replacement reserve (not less than $250 per unit per year), tax, and insurance escrows are typically required.

Origination Fee

At issuance of Commitment, 1% of the debt amount (subject to a $30,000 minimum). If provided with a Forward Commitment prior to construction or rehab, there is also a $15,000 conversion fee at stabilization.

Commitment Fee

1% (refundable) (also known as a Good Faith Deposit or Rate Lock Deposit)

Prepayment Premium

A Prepayment Premium (1% minimum) is assessed if the mortgage loan is prepaid or Fannie Mae is replaced as credit enhancer during the Prepayment Period.
(Fixed-rate: The Prepayment Period is usually 10 or 15 years, depending on whether the loan is subject to a rate reset and, if so, the term before rate reset)



Fully assumable upon approval and payment of 1% fee.

Lenders Legal Fee

To be determined at application.

Application Deposit

$17,000 (Includes appraisal, environmental assessment, physical needs assessment costs, and other due diligence costs but not including legal or construction period monitoring fees.) If Alliant is providing 4% LIHTC equity, costs may be lower.).

Subordinate Financing

All subordinate debt must be fully amortizing.
• Hard-pay subordinate debt: Requires the payment of principal and interest and is permitted only if provided by a public sector entity. The overall DCR, when combined with the first mortgage, must be at least 1.05 and the combined LTV cannot exceed 95%.
• Soft subordinate debt: Debt service cannot exceed 75% of available net cash flow.

bottom of page