Apartment Loan Types Compared: Agency, HUD, CMBS, Bank, Life Company and Bridge
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Apartment buildings with 5 or more units are financed by six main kinds of lenders: agency lenders (Fannie Mae and Freddie Mac programs), HUD/FHA, CMBS (loans pooled and sold as bonds), banks and credit unions, life insurance companies and bridge lenders or debt funds. The right one depends on the business plan more than the rate: a stabilized building held for 10 years fits a fixed rate agency loan, while a building that needs heavy renovation fits a floating rate bridge loan that funds part of the work.
This post is part of our guide to real estate syndication. It compares the six in one table, then explains when each fits. Terms are general as of November 2026 and vary by lender, program and borrower; get every term from the lender in writing.
The six loan types in one table
| Lender | Typical building | Rate | Typical term | Recourse | Prepayment | Flexibility after closing |
|---|---|---|---|---|---|---|
| Agency (Fannie Mae, Freddie Mac) | Stabilized, 5+ units | Fixed or floating | 5 to 30 years | Generally non-recourse with carve-outs | Yield maintenance, defeasance or step-down on fixed; often lighter on floating | Moderate; assumptions possible with approval |
| HUD/FHA 223(f) | Stabilized, long hold | Fixed | Up to 35 years, fully amortizing | Non-recourse with carve-outs | Program rules, ask | Lower; more reporting |
| CMBS | Stabilized, wide range of quality and markets | Usually fixed | Often 5, 7 or 10 years | Generally non-recourse with carve-outs | Usually defeasance or yield maintenance | Low; a servicer, not a banker, handles changes |
| Bank or credit union | Small to mid-size, local | Fixed for a period, or floating | Often 3 to 10 years | Often full or partial recourse | Often a step-down or none, ask | High; you can call your banker |
| Life insurance company | High quality, low leverage | Usually fixed | 5 to 20+ years | Generally non-recourse | Usually yield maintenance | Moderate |
| Bridge lender or debt fund | Value-add, lease-up, transitional | Floating | Often 2 to 3 years plus extensions | Varies, often non-recourse with carve-outs | Often minimum interest, then open | Moderate; renovation draws and tests |
"Typical" here means what lenders commonly offer, not a promise from any one lender. Each program's term sheet and the loan documents decide.
Agency loans
Fannie Mae and Freddie Mac do not lend directly; approved lenders originate loans to their program rules. Agency loans are the standard for stabilized apartment buildings because they offer long terms, fixed or floating rates and non-recourse structures. Both run small-loan programs for smaller buildings; see Fannie Mae small balance loans and supplemental loans. The trade-offs: third-party reports, occupancy and track record requirements, and prepayment penalties on fixed rate loans that can make an early sale expensive. See prepayment penalties.
HUD/FHA loans
HUD's 223(f) program insures long-term, fully amortizing fixed rate loans for buying or refinancing existing apartments. The terms are among the longest available, but processing takes longer and the program has its own requirements, including ongoing reporting. It fits a long hold more than a 3 to 5 year business plan. See HUD 223(f) loans for syndications.
CMBS loans
A CMBS lender makes the loan and then pools it with others into a trust that sells bonds. Underwriting can be more open to buildings or markets agencies decline. After closing, a servicer bound by the trust's rules handles the loan, so requests such as a partial release, an assumption or a change to reserves can be slow and costly. Prepayment is usually by defeasance or yield maintenance.
Bank and credit union loans
Local and regional banks hold many loans on their own books, so they can bend on structure, property size and borrower experience. They usually want a personal guaranty (recourse), shorter fixed rate periods and sometimes deposit relationships. For a small building or a sponsor's earlier deals, a bank is often the easiest door. See who signs the guaranty.
Life insurance company loans
Life companies lend their own long-term money on high quality buildings at low leverage, often with the lowest rates on offer. Few value-add or first deals qualify, because the companies prefer stable, well-located buildings and experienced borrowers.
Bridge loans and debt funds
Bridge lenders fund value-add and transitional deals: floating rate loans for 2 to 3 years, often with extension options, that can fund part of the renovation through draws. They require an interest rate cap and size on loan-to-cost and a future value. The exit is a sale or a refinance into permanent debt, which depends on the business plan working and on rates at the time. See bridge vs agency loans, rate caps and renovation draws.
Which loan fits which business plan?
- Stabilized building, 7 to 10 year hold: fixed rate agency, HUD or life company.
- Stabilized building, 3 to 5 year hold: floating rate agency or a bank loan with a light prepayment penalty, so an early sale is affordable.
- Value-add with renovation: bridge loan, then a refinance; or agency with a renovation reserve if the building qualifies.
- Small building (5 to 20 units): bank, credit union or an agency small-loan program. See small multifamily vs large syndication.
- Seller willing to carry a note: seller financing or an assumed loan.
Whichever you choose, size the loan on the lender's three tests before you set the raise; see how lenders size an apartment loan.
How DoorRaise fits in
DoorRaise does not lend or arrange loans, and it does not recommend lenders. It helps sponsors raise the equity for apartment buildings with 5 or more units from their friends and followers. DoorRaise forms the deal's LLC, prepares the offering documents (which describe the loan's terms for investors), files Form D and verifies every investor's accreditation, in 506(b) and 506(c) deals. Investors fund by wire into escrow at Enterprise Bank & Trust. DoorRaise charges two flat fees: $1,500 to set up (non-refundable) and $5,000 a year for administration, the first year paid at closing from the money raised and only if the deal closes.
Once you have a term sheet, start your deal and see the equity it leaves to raise.
FAQ
What is the most common loan for apartment buildings?
For stabilized buildings with 5 or more units, agency loans through Fannie Mae and Freddie Mac programs are among the most common. Banks are common for smaller buildings, and bridge loans for value-add plans.
What is the difference between an agency loan and a CMBS loan?
An agency loan is made to Fannie Mae or Freddie Mac program rules. A CMBS loan is pooled with other loans and sold as bonds, then managed by a servicer under the trust's rules. Both are generally non-recourse with carve-outs; CMBS is usually less flexible after closing.
Are bank loans for apartments recourse?
Often, yes. Many banks ask for a full or partial personal guaranty, though terms vary by bank, borrower and leverage.
Which apartment loan has the longest term?
HUD 223(f) loans offer some of the longest fixed, fully amortizing terms. Agency and life company loans also offer long fixed terms.
Do I need a bridge loan for a value-add deal?
Not always. A building that already qualifies for an agency loan may use one with a renovation reserve. Heavier renovation or low occupancy usually needs a bridge loan first.
Sources
- Fannie Mae Multifamily, fixed-rate mortgage loans
- Freddie Mac Multifamily
- HUD, Multifamily Accelerated Processing Guide
This article is general information, not legal, tax or investment advice. Loan terms vary by lender, program and borrower. DoorRaise is not a lender, law firm, broker-dealer, investment adviser or funding portal.