Fannie Mae provides credit enhancement for tax-exempt bonds issued to finance the acquisition, new construction, refinancing, or moderate to substantial rehabilitation of affordable housing multifamily properties with Low Income Housing Tax Credit (LIHTC) rent restrictions. This program provides low borrowing cost, flexible structures, and a speedy execution.
| Fannie Mae Tax-Exempt Bond Credit Enhancement | |
| Term | 10-30 years Years |
| Amortization | Up to 30 Years |
| Max LTV | The greater of 90% of market value or 80% of adjusted value for properties with LIHTC units equal to or above 90%; the greater of 85% of market value or 75% of adjusted value for all others. |
| Min DSCR DSCR Calculator | 1.15x for properties with LIHTC units equal to or above 90%; 1.20x for all others. |
| Recourse | Non-recourse |
| Escrows | Replacement reserve, tax and insurance escrows are typically required. |
| Third-Party Reports | Standard third-party reports including Appraisal, Phase I Environmental Assessment and a Physical Needs Assessment are required. |
| Interest Rate | Fixed Rate |
| Prepayment Options | Declining prepayment premium options are available. |
| Third-Party Subordinate Financing | Subordinate debt must be either fully amortizing or have a maturity date at least 90-days after the maturity of Fannie Mae’s credit enhancement. Hard subordinate debt which requires the payment of principal is permitted only if provided by a public sector entity. Soft subordinate debt service cannot exceed 75% of available cash flow. |
| Additional Considerations | The Credit Enhancement Instrument issued by Fannie Mae is provided in accordance with the terms of a Reimbursement Agreement between the borrower and Fannie Mae, among other documents. |
