Fannie Mae multifamily eligibility:
borrower & property requirements (2026)

The cross-program rules that apply across every Fannie Mae multifamily DUS execution — borrower entity requirements, the 5-unit minimum, the stabilization standard, non-recourse mechanics, commercial space limits, and assumability.

Borrower entity requirements

Every Fannie Mae multifamily loan is made to a single-asset, bankruptcy-remote borrowing entity — typically a Delaware LLC or limited partnership formed solely to own the subject property. The entity may not have other business activity, other liabilities, or other assets beyond what's incidental to operating the property. This single-asset structure is what makes the non-recourse treatment work: lenders take property risk, not enterprise risk.

Behind the SPE sits the sponsor and key principal, who together demonstrate experienced multifamily ownership and operation. Fannie Mae underwrites the key principal's track record (number of properties, NOI growth, occupancy history), financial wherewithal (net worth, liquidity), and operational continuity. New sponsors with thin track records can sometimes participate as minority partners with experienced lead sponsors, but pure first-time DUS borrowers are uncommon.

The 5-unit minimum

Five residential units is the bright-line threshold separating Fannie Mae's multifamily and single-family worlds. Five units or more is multifamily — eligible for DUS executions, governed by the Multifamily Selling & Servicing Guide. Four units or fewer (duplex, triplex, fourplex, and single-family) is residential conforming — governed by Fannie Mae's single-family Selling Guide and out of scope for this site.

Manufactured housing communities (MHCs) have a different threshold: minimum 50 pad sites for DUS eligibility. MHCs are otherwise treated similarly to multifamily, with bespoke underwriting for ground-lease structures, park ownership, and resident-purchased homes.

Stabilization

DUS standard executions require that the property be stabilized at funding — defined as 90%+ physical occupancy maintained for at least 90 consecutive days prior to closing, with occupancy supported by qualified tenants paying market or contractual rent. The stabilization standard ensures that the property's in-place income stream is durable enough to support the requested debt service.

Properties that don't meet the standard at closing have several options: bridge debt to stabilization followed by DUS take-out, specialized DUS Pre-Stabilization executions for properties close to threshold, or Fannie Mae's separate construction-to-permanent program for new development. Each of those paths has its own underwriting and pricing implications.

Recourse, non-recourse, and bad-boy carve-outs

Fannie Mae multifamily loans are non-recourse to the borrower at the entity level. The standard exceptions — "bad-boy" carve-outs — make the borrower personally liable for borrower misconduct:

• Fraud or intentional misrepresentation in connection with the loan
• Voluntary bankruptcy filing by the borrower or borrower-controlled action triggering bankruptcy
• Environmental contamination caused or permitted by the borrower
• Unauthorized transfer of the property or controlling interests in the borrower
• Misappropriation of insurance proceeds, condemnation awards, security deposits, or rent
• Waste — physical destruction or material damage to the property by the borrower
• Failure to pay taxes if the failure leads to a tax sale

The carve-out guaranty is signed by a Carve-Out Guarantor — usually the key principal or a related individual — with sufficient net worth and liquidity to satisfy the exceptions. Fannie Mae imposes financial covenants on the guarantor (commonly minimum net worth of 100% of loan balance and minimum liquidity of 5–10% of loan balance), monitored annually for life of loan.

Commercial space limits

A multifamily property can include some commercial space and remain eligible for DUS — but the limits are firm:

• Net rentable area: commercial space cannot exceed 35% of total NRA
• Effective gross income: commercial revenue cannot exceed 20% of total EGI
• Compatibility: commercial use must be compatible with multifamily operation — retail, office, professional services, parking — not industrial, hazardous, or otherwise problematic uses

Properties beyond either threshold are typically routed to mixed-use or commercial lenders rather than DUS multifamily.

Assumability

Fannie Mae DUS loans are fully assumable subject to DUS lender approval, Fannie Mae approval, and a 1% assumption fee paid at closing of the assumption. The assuming buyer must demonstrate equivalent experience and financial capacity to the original borrower, and an acceptable replacement Carve-Out Guarantor must sign on.

Assumability is a meaningful asset attribute, especially in rising-rate environments. A property carrying a 4.5% DUS coupon when market rates are 6.5% can transfer that below-market debt to a buyer at the 1% assumption fee — the implied value transfer in the right scenario can be a significant portion of the equity check. Assumability is one of the reasons DUS loans command pricing benefits in the secondary market relative to non-assumable bank debt.

Across-program parameter benchmarks

The cross-program LTV and DSCR benchmarks at a glance — actual transaction parameters move with market conditions, sponsor profile, and underlying execution. See full DUS programs reference →

• Standard DUS: up to 80% LTV / 1.25x DSCR
• SBL: up to 80% LTV / 1.25x DSCR ($1M–~$7.5M loan size)
• MAH: up to 90% LTV / 1.15x DSCR (mission-driven)
• Seniors Housing: up to 75% LTV / 1.30x DSCR
• Green MBS / Green Rewards: follows underlying execution; pricing benefit attaches separately
• Credit Facility: bespoke; LTV and DSCR vary by collateral pool

Frequently asked questions