Multifamily Loans

Today many apartment loans like mortgages for all commercial real estate are primarily financed with a short term or intermediate term balloon or an adjustable rate mortgage. This can be both good and bad for most investors. Short term loans almost always have a lower rate and if you are investing for cash flow this is good news. But when the term is up and you need to refinance or accept an adjusted rate this may not be so good. Multifamily mortgages with government insurance are generally long term, fully amortized mortgages with low interest rates.

FHA Apartment Loan

The rates today for an FHA apartment loan could be fixed and fully amortized for 35 years at a rate below 6%. The rates for these loans may be contrary to residential loans which is what most people know. FHA Multifamily rates are lower the larger the loan. Starting around $750,000 as a minimum loan up to $50,000,000.00 or more these rates will vary based on loan amount. The lowest rates are reserved for loans over $5,000,000.00. There is a rate tier between $3,000,000.00 and $5,000,000.00 and between $1,000,000.00 and $3,000,000. Each tier may represent approximately 25 basis points. So a loan of $5,000,000.00 or more may be nearly 100 basis points higher than one of %750,000.00.

The Downside to an FHA Multifamily Mortgage

Even though the rates are fixed and fully amortized commercial mortgages the and this type of financing is generally preferred over short term programs. The disadvantage is it will take between 4 to 6 months to and close these FHA apartment loans. Therefore, most purchases are done through conventional or private financing because the sellers typically do not want to tie up their properties for 6 months or more before they close. That does not discourage owners who know the advantages of long term fixed and fully amortized financing that gives great cash flow for up to 35 years. This is why most of these loans are refinances.

FHA - Conventional - Private Financing

One of the primary factors in choosing a type of loan you will get is timing. For FHA it will take 4-6 months to close your commercial apartment loan but they offer the best terms. A conventional multifamily mortgage may take 60 to 90 days. While private financing usually takes 3 to 6 weeks and has the highest interest rates. Time is not the only difference, but if you qualify for FHA financing then it will be because the terms are so much better.

So whether you need a FHA Conventional or Private Money Apartment loan I can help you analyze your situation and give you the best options. Contact me at 708-299-3244 or send me an email at financingbroker@gmail.com to discuss your apartment and commercial mortgage needs.