Bridge to Agency Financing for Multifamily Real Estate

Tim Milazzo
June 23, 2018

Agency loans are awesome. Many multifamily investors analyze properties and think about their returns with an agency loan product in mind. Up to 80% LTV, non-recourse, competitive rates… what’s not to like?

But agency underwriting guidelines are pretty stringent. Properties are scrutinized for vacancy and deferred maintenance, and need to be stabilized (typically 90%+ occupied for at least three consecutive months).

Many major DUS lenders are now offering bridge loan products in order to help borrowers lock down financing on quality investments that will soon be ready for a loan guaranteed by Fannie Mae or Freddie Mac (within 1–3 years), but doesn’t quite pass muster yet. These “bridge to agency” loans often come at a cheaper rate than a typical bridge loan, and are often non-recourse, a strong value-prop to multifamily investors.

There is one catch, though. The bridge loan is intended to feed into that lender’s own agency loan offering, so they’ll typically tie off the end of the loan term with an exit fee, which is waived only if the borrower refinances into their agency financing. Refinancing elsewhere or selling the property upon maturity become less profitable options.

For the right multifamily stabilization deal, this type of bridge-to-agency loan is a strong option. Grab your bridge-to-agency quotes by submitting a loan request on the StackSource platform, or chatting with one of our Capital Advisors.

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