Fannie Mae Military Housing Loans

When U.S. service members return home from overseas, they have a real need for quality housing, particularly those with families. Similarly, active members of the armed forces stationed domestically often opt for housing near major military bases.

If you're considering purchasing a multifamily property in an area with a market significantly influenced by a military base, or with a military tenant concentration of more than 20%, a Fannie Mae Military Housing Loan could be the perfect solution.

Much like many other Fannie Mae multifamily loan options, Fannie Mae military housing loans offer competitive interest rates, are mainly non-recourse, and are fully assumable (with lender approval.)

Sample Terms for Fannie Mae Military Housing Loans in 2024

Size: $1 million+ (no set maximum) 

Terms: Vary, with both fixed- and variable-rate options available

Amortization: 30 years

Maximum LTV: 75% 

Minimum DSCR: 1.30x 

Recourse: Non-recourse with standard “bad boy” carve-outs

Prepayment Options: Yield maintenance or 1% prepayment penalty, whichever is larger 

Fannie Mae Military Housing Loan Pros and Cons

Advantages

• Very competitive interest rates

• Up to 75% LTV

• Most loans are non-recourse

• Supplemental loans allowed

Disadvantages

• Requires replacement reserves

• Requires 85% occupancy or 80% economic occupancy for the 90 days before closing

• Only available in select markets

Case Study: Buying a Complex in San Diego

Meet James, a real estate investor looking to purchase a multifamily property in San Diego, a market heavily influenced by the presence of a military base. James identified a 15-year-old military housing complex with a military tenant concentration of 25%, making it a perfect candidate for a Fannie Mae Military Housing Loan. This well-maintained complex consists of three buildings with 75 units, providing housing for service members and their families.

James faced a challenge when searching for the right financing option, as not every loan product accommodated the unique needs of military housing properties. With a significant military tenant concentration and the property's location near the military base, James needed a financing solution tailored to this niche market.

The Fannie Mae Military Housing Loan emerged as the ideal option for James due to its competitive interest rates, non-recourse feature, and focus on properties with a strong military tenant base. The loan provided up to 75% loan-to-value (LTV), allowing James to secure the necessary financing for his investment while minimizing his financial risk.

James was able to purchase the property for $6.8 million, and the Fannie Mae lender provided the Fannie Mae Military Housing Loan at a 70% LTV, he secured a loan amount of $4.8 million.

With a 10-year term and a fixed interest rate, the loan offered him stability and predictability in his payments. This financing solution enabled him to invest in a multifamily property that catered to the housing needs of military personnel, ultimately supporting the well-being of those who serve our country.

This is a fictional case study provided for illustrative purposes.