Fannie Mae DUS®
Adjustable Rate Mortgage (ARM) 7-6
Arbor’s DUS ARM 7-6 product offers low-cost financing with an initial interest rate lower than available fixed rates, a maximum interest rate that is set upon loan origination, and the ability to convert to fixed-rate financing.
| Loan Amount | $750,000 minimum. |
| Loan Term | 7 years. |
| Amortization | Up to 30 years. Interest-only option is available subject to meeting eligibility criteria. |
| Minimum DSCR | 1.00 at Maximum Interest Rate. |
| Maximum LTV | Up to 80% LTV. |
| Interest Rate Limits | Maximum ARM rate set at rate lock with the cost of the interest rate CAP included. The interest rate will reset every 30 days based on the applicable one-month LIBOR yield. 1% maximum increase or decrease to rate at each ARM change. Maximum lifetime interest rate to Borrower capped at 6%, plus the guaranty fee, plus the servicing fee. |
| Rate Structure | Pricing is based on a margin plus the current one-month LIBOR. |
| Eligible Properties | Mortgage loan for the acquisition or refinance of multifamily properties. |
| Eligible Borrower | Single Asset Entity. |
| Occupancy Requirement | 85% physical occupancy, 70% economic occupancy; 90% if loan amount is under $3,000,000. |
| Tax & Insurance Escrows | Monthly deposits required. |
| Replacement Reserves | Underwritten at a minimum $250 per unit per annum. |
| Recourse | Typically non-recourse with standard carve-outs for “bad acts” such as fraud and bankruptcy. Loans less than $3M may be recourse (depending on MSA). |
| ARM Look Back | 15-day look back for ARM adjustment. |
| Commercial Space | Maximum 35% of net rentable area and maximum 20% of effective gross income. |
| Required Reports | Appraisal, Property Condition Assessment, Phase I Environmental. |
| Prepayment | Lockout for one year followed by a 1% prepayment premium during the ARM period. No prepayment premium during the last three months of ARM term. |
| Assumable | Subject to approval and 1% fee (non-recourse loans only). |
| Supplemental Loans | Not permitted prior to conversion to fixed rate. The ARM execution is eligible to be used for approved Supplemental Loans. |
| Pricing | Tiered Pricing Matrix. More favorable terms available for higher DSC and lower LTV. |
| Accrual | Actual/360. |
| Rate Lock | 30-day commitments are available for an additional cost. |
| Application Deposit | $20,500. Covers estimated processing and legal fees. |
| Origination Fee | Minimum 1%. |
| Good Faith Deposit | 2% of loan amount. |
| Conversion to Fixed Rate | Any time beginning on the first day of second loan year and ending on the first day of the sixth loan year. The borrower may convert to either a 10/9.5 or a 7/6.5 fixed yield maintenance loan. No prepayment charged upon conversion. Conversion requires minimal re-underwriting. Loan amount cannot be increased, but borrower may request a Supplemental Loan. No change to guaranty and servicing fees upon conversion. |
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