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ARM 7/6™ Loan

Learn more about our 7-year variable-rate financing option with an embedded cap and an option to convert to fixed-rate.

Term Sheet (PDF)

Benefits

  • Attractive low-cost financing
  • No minimum or maximum loan size
  • Maximum interest rate is set at Rate Lock
  • Convertible to a fixed-rate Mortgage Loan with minimal re-underwriting

Eligibility

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

Term

7 years

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

80%.

Minimum DSCR

1.00x at the maximum lifetime interest rate.

Maximum Mortgage Loan amount shall not exceed that of a fixed-rate Mortgage Loan with similar terms.

Rate Lock

Maximum 30-day commitments

Index

30-Day Average SOFR.

Supplemental Financing

Supplemental Mortgage Loans are available.

Prepayment Availability

No prepayment permitted during the Lockout Period (typically, the first Loan Year); 1% prepayment premium thereafter. No prepayment premium charged during the "open period" (typically the last 3 months of the Mortgage Loan term.

Interest Rate Cap

Maximum monthly interest rate adjustment of plus or minus 1%.

Maximum lifetime interest rate to Borrower capped at 6%, plus the Guaranty Fee, plus the Servicing  Fee.

Interest Rate Floor

The interest rate will never be less than the Margin, which is the sum of the Investor spread, plus the Guaranty Fee, plus the Servicing Fee.

Conversion to Fixed Rate

ARM 7/6 Loans have a conversion feature whereby the interest rate may be converted to a 7- or 10-year fixed-rate Mortgage Loan on any rate change date after the required Lockout Period (typically the first Loan Year) and before the start of the "open period" (typically the last day of the 4th month preceding the end of the Mortgage Loan term), provided the Mortgage Loan has not been delinquent during the previous 12 months and the Borrower is not in default under any Loan Document.

  • No prepayment premium charged when the ARM Loan converts to a fixed rate Mortgage Loan.
  • Minimal re-underwriting; Lender must determine whether the current Net Cash Flow can support the new fixed rate Mortgage Loan terms.
  • No increase in the loan amount; Mortgage Loan may be eligible for a Supplemental Mortgage 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

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