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.
- 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
- Existing, stabilized multifamily properties, including: Conventional, Multifamily Affordable Housing, Seniors Housing, Student Housing, and Manufactured Housing Communities
- Available for acquisition or refinance
Up to 30 years.
Interest Rate Adjustments
Adjusts based on changes to the underlying Index and is equal to the Index plus the Margin.
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.
Maximum 30-day commitments
30-Day Average SOFR.
Supplemental Mortgage Loans are available.
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.
Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.
Replacement reserve, tax, and insurance escrows are typically required.
Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.
Mortgage Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience.