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Declining Prepayment Premium

Fannie Mae Multifamily offers a Declining Prepayment Premium (also known as Graduated Prepayment Premium) that provides a flexible prepayment premium structure for fixed rate Mortgage Loans, Structured ARM Loans (SARM Loans) and Hybrid ARM Loans.

Term Sheet (PDF)


Benefits

  • Provides more flexibility with a wider prepayment window.
  • Easier calculation of Prepayment Premiums generally permitted at any point in the loan term.
  • Certainty of execution

Eligibility

  • Available for all Asset Classes.
  • Available for acquisition or refinance.
  • Available for purchase by third-party Investors and the Fannie Mae Multifamily Trading Desk.

Term

5, 7, 10, 12, 15, 18, or 30 years.

Fixed-Rate Declining Prepayment Premium Structures

Loan Term

Structure

Lockout Period

5 years

5-4-3-2-1

None

7 years

5-4-3-2-1

 

2 years

10 years

5-5-4-4-3-3-2-2-1-1

None

12 years

5% loan years 1-4, 4% loan years 5-6, 3% loan years 7-8, 2% loan years 9-10, 1% to maturity

None

15 years

5% loan years 1-7, 4% loan years 8-9, 3% loan years 10-11, 2% loan years 12-13, 1% to maturity

None

18 years

5% loan years 1-7, 4% loan years 8-9, 3% loan years 10-11, 2% loan years 12-13, 1% to maturity

None

30 years

5% loan years 1-7, 4% loan years 8-9, 3% loan years 10-11, 2% loan years 12-13, 1% to maturity

None

 

SARM Loan Declining Prepayment Premium Structures

Loan Term

Structure

Lockout Period

5 years

5-4-3-2-1

1 year

7 years

5-4-3-2-1-1-1

1 year

10 years

5-4-3-2-1-1-1-1-1-1

1 year

 

Hybrid ARM Loan Declining Prepayment Premium Structures

Loan Term

Structure

Lockout Period

5 yr Fixed/25 yr Adj

5-4-3-2-1

None

5 yr Fixed/25 yr Adj

3-2-1-1-1

None

7 yr Fixed/23 yr Adj

5-5-4-4-3-2-1

None

7 yr Fixed/23 yr Adj

3-3-2-2-1-1-1

None

10 yr Fixed/20 yr Adj

5-5-4-4-3-3-2-2-1-1

None

10 yr Fixed/20 yr Adj

3-3-3-2-2-2-1-1-1-1

None

 

Investor portion of Declining Prepayment box was completely deleted.