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.
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 |
| 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 |