Fannie Mae and Freddie Mac Small Balance Multifamily Loans

Fannie Mae and Freddie Mac both run small-loan programs for apartment buildings with 5 or more units. Fannie Mae defines a Small Mortgage Loan as one of $9 million or less, and its approved lenders publish a $1 million floor; Freddie Mac's small-loan term sheet covers loans of generally $2 million to $10 million on mostly 5 to 50 unit properties. Both programs are non-recourse except for carve-outs for bad acts, require at least 1.25x debt coverage, and are available only through each agency's approved lender network, not directly.

This guide puts the two programs side by side from their own documents, shows a sizing example, and explains how a sponsor on a first agency loan gets one. For the bigger picture of agency loans against bridge loans, see bridge loan vs. agency loan.

What is a Fannie Mae Small Loan?

Fannie Mae's Multifamily Selling and Servicing Guide says it plainly: "A Small Mortgage Loan is a Mortgage Loan with an original loan amount of less than or equal to $9 million." Lenders may underwrite it under the small-loan chapter or as a regular conventional loan (Fannie Mae Multifamily Guide, Section 901, effective October 26, 2026). The guide also bars delivery of a small loan if the property's estimated completion and repair costs are more than 10% of the loan balance (Section 907.01), which matters for heavy value-add plans.

Fannie Mae's own small-loan term sheet would not load for us, so the terms below come from a Fannie Mae DUS lender's published sheet. Greystone's Fannie Mae Small Mortgage Loans term sheet (dated 2025) lists (Greystone):

• Loan amount between $1 million and $9 million in all markets.
• Fixed terms of 5, 7, 10, 12, 15, 18 and 30 years, 30-year amortization standard, partial or full-term interest-only available.
• 1.25x minimum DSCR; 75% maximum LTV for cash-out refinances, up to 80% for qualifying loans including acquisitions.
• Non-recourse, subject to standard carve-outs for bad acts.
• Yield maintenance and step-down prepayment options.
• Net worth equal to the loan amount and liquidity equal to 9 months of principal and interest.
• Assumable with the lender's consent and a 1% fee.

Fannie Mae's conventional term sheet confirms the shared basics: properties with a minimum of five units, a 1.25x minimum DSCR, up to 80% LTV, and non-recourse execution "available for most loans greater than $750,000" with carve-outs for fraud and bankruptcy (Fannie Mae, Conventional Properties term sheet).

What is Freddie Mac's small balance loan?

Freddie Mac has long called its small-loan business the Small Balance Loan (SBL) program, and its research page still publishes SBL prepayment reports. Its current small-loan term sheet, dated 4/26, is titled Optigo Conventional Small (Freddie Mac). It lists:

• Loan amount generally $2 million to $10 million, for predominantly market-rate properties of 5 to 50 units.
• Terms of 5, 7, 10, 12 or 15 years, up to 30-year amortization.
• Minimum amortizing DCR of 1.25x. Maximum LTV of 75% for terms of 5 to under 7 years and 80% for 7 years or more; 65% to 70% for full-term interest-only.
• Non-recourse except for standard carve-outs.
• Yield maintenance until securitization, then a 2-year lockout and defeasance; no premium in the final 90 days; step-down available at extra cost.
• "Hard subordinate debt is not permitted", so a seller second loan secured on the property would not fit behind it.
• A 0.1% application fee, and tax, insurance and replacement reserve escrows generally required.

Ask an Optigo lender which small-loan execution it offers today, because names and ranges change.

Fannie Mae vs. Freddie Mac small loans: side by side

Sources: Fannie Mae guide, Greystone term sheet, Freddie Mac term sheet. Each lender's quote and the loan documents control.

A sizing example: what loan does a 30-unit building get?

A 30-unit building is priced at $4,500,000 and has $290,000 of net operating income, a 6.4% cap rate. Assume a 6.00% rate on 30-year amortization, which gives a loan constant of 7.195% a year. All numbers are hypothetical, for illustration only.

Two lessons. Coverage, not the 80% headline, sets the amortizing loan. And full-term interest-only costs leverage: about $300,000 less loan in exchange for lower payments, which Freddie Mac tests at an amortizing payment anyway. The difference has to come from investors, so it changes how much you raise; see sources and uses.

If income disappoints. If NOI is $250,000 instead, the coverage test gives $250,000 / 1.25 / 7.195% = $2,779,708, about $445,000 less than the base case. Lenders size on their own underwritten NOI, often below the sponsor's, so build your raise around the lender's number, not yours.

Can you get a multifamily loan under $1 million?

Not easily from the agencies. Greystone's Fannie Mae sheet starts at $1 million, Freddie Mac's small-loan sheet generally starts at $2 million, and Fannie Mae's conventional term sheet says non-recourse execution is available for "most loans greater than $750,000." Fannie Mae's guide does not set a separate minimum in the small-loan definition we loaded, so a lender may set its own.

For a smaller building, the usual routes are a local bank or credit union, an investor DSCR loan (see multifamily DSCR loans), seller financing, or taking over the seller's existing loan if its lender allows it.

How does a first-time sponsor get an agency small loan?

You cannot apply to Fannie Mae or Freddie Mac directly. You work with an approved lender, a DUS lender for Fannie Mae or an Optigo lender for Freddie Mac, or a mortgage broker who places loans with them. The lender then judges you, not only the building.

1. Show the balance sheet. Greystone's sheet asks for net worth equal to the loan amount and liquidity equal to 9 months of principal and interest. On a $3,000,000 loan at 6.25% over 30 years, 9 months of payments is about $166,000.
2. Show experience, or borrow it. If you have not owned apartments, many sponsors add a co-sponsor or key principal who has, in exchange for a share of the sponsor's profit.
3. Sign the carve-out guaranty. Non-recourse still means someone signs for bad acts, and for environmental and other carve-outs. See loan guarantors in a syndication.
4. Expect third-party reports. Fannie Mae's conventional term sheet lists an appraisal, a Phase I environmental site assessment and a property condition assessment.
5. Plan the exit around prepayment. Compare yield maintenance, defeasance and step-down for your hold period; see prepayment penalties explained.
6. Know the supplemental option. A supplemental loan later can return capital, but it also adds debt; see agency supplemental loans.

How DoorRaise fits in

DoorRaise does not lend or arrange loans. Once you have a loan quote, DoorRaise helps you raise the equity for the rest of the purchase from your friends and followers, with verified accredited investors under Rule 506(b) or 506(c). It forms the deal's LLC, prepares the offering documents from your inputs and files Form D. Investors fund by wire into escrow at Enterprise Bank & Trust, an FDIC-insured bank, so their money moves only at closing. Fees are $1,500 to set up (non-refundable), $5,000 at closing (only if the deal closes) and $3,500 a year.

See how it works or see pricing.

FAQ

What are Fannie Mae small balance loans?

Fannie Mae calls them Small Mortgage Loans: multifamily loans of $9 million or less on properties with 5 or more units, made through its DUS lenders, with lender-published terms such as a $1 million minimum, 1.25x DSCR and up to 80% LTV.

Does Fannie Mae have a minimum loan amount for multifamily?

The guide's small-loan definition sets a maximum ($9 million), not a minimum. Lenders publish their own floors; Greystone's sheet starts at $1 million, and Fannie Mae's conventional term sheet says non-recourse is available for most loans over $750,000.

What is the Freddie Mac small balance loan program called now?

Freddie Mac's current small-loan term sheet (4/26) is titled Optigo Conventional Small and covers loans of generally $2 million to $10 million. Freddie Mac's research page still refers to the Small Balance Loan (SBL) name in its prepayment reports.

Can I get a multifamily loan under $1 million?

Usually not from the agencies. Banks, credit unions, investor DSCR lenders and seller financing are the common routes for smaller loans.

Are agency small loans assumable?

Greystone's Fannie Mae sheet says loans are assumable with the lender's consent and a 1% fee plus costs. Ask the lender for the terms in your loan documents.

Sources

• Fannie Mae Multifamily Selling and Servicing Guide, Part III Section 901 (effective October 26, 2026)
• Fannie Mae Multifamily Selling and Servicing Guide, Section 907.01 (effective October 26, 2026)
• Fannie Mae Multifamily, Conventional Properties term sheet
• Greystone, Fannie Mae Small Mortgage Loans term sheet (2025)
• Freddie Mac Multifamily, Optigo Conventional Small term sheet (4/26)

This article is general information, not legal, tax or investment advice. Agency and lender terms change; confirm every term with an approved lender. DoorRaise is not a lender, law firm, broker-dealer, investment adviser or funding portal.