Moderate Rehabilitation (Mod Rehab) Supplemental Mortgage Loan for Affordable Properties

Subordinate financing options for affordable multifamily properties that have completed moderate rehabilitation.

Term Sheet (PDF)


  • Great value-add option for M.TEB execution
  • The Mod Rehab Supplemental Mortgage Loan is excluded from the one Supplemental loan rule
  • Loan sizing is comparable to the first lien mortgage loan
  • Lower pricing than generally available on other Supplemental Mortgage Loans
  • Lower cost than refinancing
  • Access to additional capital
  • Certainty of execution
  • Speed in processing and underwriting


  • First Mortgage Loan or BCE identified as Mod Rehab
  • Existing Fannie Mae fixed-rate or adjustable-rate mortgage loans or BCEs
  • Lender must be the servicer of the existing Fannie Mae Mortgage Loan or BCE
  • Fannie Mae must be the only senior debt holder on the property


5-30 years; must be coterminous with the senior Mortgage Loan or Bond Credit Enhancement Mortgage Loan (BCE).


Up to 35 years.

Interest Rate

Fixed- and variable-rate options available.

Maximum LTV

Up to 85%, depending upon the MAH execution type. Up to 90% for earn outs and select other cases.

Minimum DSCR

As low as 1.15x, depending upon the MAH execution type.

Mod Rehab Supplemental Mortgage Loan Timing

Within 36 months of origination of the Mod Rehab first mortgage loan or BCE. No one-year waiting period.

Rate Lock

30- to 180-day commitments. Borrowers may lock a rate with the Streamlined Rate Lock option. 


30/360 and Actual/360.


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


Replacement reserve, tax and insurance escrows are typically required, based on the resulting Tier of the combined Pre-Existing Mortgage Loan or BCE and Moderate Rehabilitation Supplemental Mortgage Loan.

Third-Party Reports

Standard third-party reports, including Phase I Environmental Site Assessment and a Property Condition Assessment, may not be required if certain conditions are met.


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


Permitted for fixed rate Moderate Rehab Supplemental Mortgage Loans.

Rehabilitation Requirements

Completed at least $8,000/unit of property improvements. As a best practice, at least 60% of renovation budget allocated to interior unit improvements.

Verification of Property Improvements

Lender must document all completed rehabilitation work and verify its completion through a site inspection if the work is not performed pursuant to a Completion/Repair Agreement or a Rehabilitation Reserve Agreement.