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ARM 5-5

Learn about our 5-year variable-rate financing option with an embedded cap and an option to extend for an additional 5-year term or convert to fixed-rate.

Benefits

  • Attractive low-cost financing
  • No minimum or maximum loan size
  • Maximum interest rate is set at  rate lock
  • Optional extension to second  5-year term with minimal re-underwriting
  • Convertible  to a fixed-rate loan with minimal re-underwriting

Eligibility

  • Existing, stabilized multifamily  properties, including: Conventional, Multifamily Affordable Housing, Seniors  Housing, Student Housing, and Manufactured Housing Communities
  • Loans  for acquisition or refinance

Term

Initial 5-year loan term. Optional extension to a second 5-year  term at maturity.

The rollover will retain the same Guaranty and  Servicing fees as the original loan.
Rollover will not incur a prepayment premium.

Amortization

Up to 30 years.

Interest Rate Adjustments

Adjusts based on changes to the underlying Index and is equal to the index plus the Margin.

Maximum LTV

65%.

Minimum DSCR

1.00x at the maximum lifetime interest rate. Mortgage loan amount shall not exceed that of  a fixed-rate loan with similar terms.

Rate Lock

30-day commitments.

Index

30-day Average SOFR.

Supplemental Financing

Supplemental loans are available.

Lockout Period; Prepayment Availability

No Prepayment is allowed during the first year of either the initial or second 5-year variable rate terms; Thereafter, Prepayment is permitted with the payment of a 1% Prepayment Premium. No Prepayment Premium is due during the “open period” (typically the last 3 months) of either the initial or second 5- year variable rate loan terms.

Interest Rate Cap

Maximum monthly interest rate adjustment of 1% up or down. Maximum lifetime interest rate to Borrower capped at 5%, plus the guaranty fee, plus the servicing fee.

Interest Rate Floor

The interest rate will never be less than the sum of the investor spread, the guaranty fee and the servicing fee.

Conversion to Fixed Rate

Subject to the terms of the Loan Document, the variable rate Mortgage Loan may be converted to a fixed rate Mortgage Loan (with a 7 or 10 year term) on any rate change date beginning on the first day after the Lockout Period and ending on the first day of the third month prior to the Maturity Date.

  • No Prepayment Penalty is charged at the time that the variable rate Mortgage Loan converts to a fixed rate Mortgage Loan.
  • Minimal re-underwriting; Lender determines that the current Net Cash Flow can support the new fixed-rate terms.
  • No increase in the loan amount; loan may be eligible for a Supplemental Loan.

Accrual

Actual/360.

Recourse

Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.

Escrows

Replacement reserve, tax, and insurance escrows are typically required.

Third-Party Reports

Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.

Assumption

Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience.