Fannie Mae® Hybrid Adjustable Rate Mortgage (ARM)
Arbor’s Hybrid ARM product offers a 30-year mortgage loan, comprised of an initial term where interest accrues at a
fixed-rate, after which it automatically converts to accrue interest at an adjustable-rate for the remaining term.
| Loan Amount | Up to $6 million nationwide |
| Loan Term | 7-year fixed rate term, followed by a 23-year adjustable rate term; or 10-year fixed rate term, followed by a 20-year adjustable rate term |
| Amortization | 30 years |
| Maximum LTV | Up to 80% |
| Minimum DSCR | 1.25x Actual Amortizing DSCR. The maximum loan amount must be determined by using a minimum 1.00x sufficient to cover a debt service constant that equals the sum of (i) the interest rate during the fixed rate term, plus (ii) 2.50% |
| Rate Lock | 30- to 180-day commitments; Borrowers may lock a rate with the Streamlined Rate Lock option |
| Interest Rate Adjustments | Starting in the adjustable-rate period, adjusts based on changes to the underlying index and is equal to the Index plus the Margin |
| Index During Adjustable-Rate Term | 30-day Average SOFR |
| Margin During Adjustable-Rate Term | 1.15%, plus the Guaranty Fee and the Servicing Fee in effect at Rate Lock |
| Prepayment Availability | Flexible prepayment options available during the fixed-rate term, including yield maintenance and declining prepayment premium; no prepayment fees during the adjustable-rate period |
| Maximum Interest Rate During The Adjustable-Rate Term | Starting with the conversion from the fixed interest rate to the adjustable interest rate and thereafter, maximum semi-annual interest rate adjustment of 1% up or down
Maximum lifetime interest rate to Borrower capped at 5% over the initial fixed rate |
| Lifetime Interest Rate Floor | The interest rate will never be less than the Margin |
| Supplemental Financing | Not available |
| Accrual | 30/360 or Actual/360 |
| Recourse | Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy |
| Escrows | Replacement reserve, tax, and insurance escrows are typically required |
| Third-Party Reports | If underwriting to Small Mortgage Loans, then streamlined inspection and Environmental Screening using the ASTM E-1528-14 protocol, otherwise, standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment |
| Application Deposit | $10,000; Covers estimated processing and legal fees |
| Assumption | Loans are typically assumable, subject to review and approval of the new Borrower’s financial capacity and experience |
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