Apartment Loans

Financial Compound is a Santa Monica-based commercial mortgage broker skilled to handle all of your apartment loan needs. We arrange apartment loans for 5+ unit multifamily properties nationwide — including Fannie Mae DUS, Freddie Mac, HUD/FHA, life company, bank portfolio, and bridge financing. Whether you are acquiring a value-add property in Los Angeles, refinancing a stabilized garden-style asset, or repositioning a Class B apartment building, our brokerage matches each deal with the lender best positioned to deliver competitive pricing and execution certainty.

Apartment loans remain one of the most actively financed segments of the commercial real estate capital markets. Lenders have long viewed apartments as one of the safest property types to lend against — re-tenanting is relatively easy and inexpensive compared to highly specialized assets like medical office space, and in many parts of the U.S. where home ownership is not affordable, apartment markets remain a viable and vital part of the economy.

Agency Apartment Loans: Fannie Mae, Freddie Mac & HUD

Many borrowers choose long-term fixed-rate apartment loans provided by the agencies, including Fannie Mae (FNMA), Freddie Mac, and HUD/FHA. Fannie Mae works through Designated Underwriter and Servicer (“DUS”) originators — a network of approximately 24 lenders and mortgage bankers authorized to fund these types of loans on behalf of Fannie Mae.

Interestingly, although the agency guidelines are the same for all DUS originators, we have found in our experience that each DUS originator has its own approach and risk profile with agency lending. Foremost, DUS originators are involved in risk sharing with the agencies and typically hold the riskiest pieces of the loans in their own portfolios. This results in DUS originators taking different approaches and risk tolerances for the same transaction, which is exactly why working with an experienced apartment loan broker matters. We shop your deal across multiple DUS originators to surface the most competitive terms.

Fannie Mae DUS Apartment Loan Terms

Loan Structures for Apartments Beyond Agency

There are various other loan structures for apartments besides agency loans. The right structure depends on the property’s stabilization status, the borrower’s hold period, and the business plan.

Apartment Bridge Loans

Sometimes an apartment property is in need of renovation, and a short-term bridge loan is more suitable. Apartment bridge financing allows the borrower to perform capital upgrades to the units — such as new carpet, paint, appliances, and flooring — and to increase and stabilize the property’s cash flow. Once the apartment cash flow is maximized, that may be a more appropriate time to roll into a long-term fixed-rate apartment loan or agency takeout.

Portfolio & Bank Apartment Loans

In addition to agency loans for stabilized apartment properties, portfolio lenders should not be overlooked. A proficient commercial mortgage broker, such as Financial Compound, can guide you to the right loan product. At times, portfolio lenders offer the most favorable terms for borrowers — including up to 85% LTV and 1.05 DCR for the right deal profile.

HUD / FHA Apartment Loans

HUD-insured apartment loans (such as Section 223(f) for refinance/acquisition and Section 221(d)(4) for construction or substantial rehabilitation) offer the longest amortization in the industry — up to 35 years for 223(f) and up to 40 years for 221(d)(4) — at fixed, non-recourse rates. HUD financing is best suited for long-term holders who can absorb a 6–9 month underwriting and closing timeline.

How Lenders Underwrite Apartment Loans

With most apartment loans, lenders will underwrite market vacancy, management fees, and reserves on a per-unit basis. Manager-occupied units will typically be excluded from the rental collection count. Lenders also stress-test debt service coverage at higher interest rates to confirm that the loan can withstand refinancing under a different rate environment.

Some apartment loans today exhibit creative strategies by borrowers to enhance property cash flow, including ancillary services such as providing high-speed internet and phone service to tenants for a nominal fee, as well as laundry and vending income. Some apartment loans benefit from RUBS (Ratio Utility Billing System), a process in which the apartment owner charges tenants their pro rata share for services like water and electricity — boosting effective gross income without raising base rents.

Apartment Loans in Los Angeles & Nationwide

Headquartered in Santa Monica, CA, Financial Compound has deep expertise in apartment loans in Los Angeles and Greater Southern California — markets where rent control, soft-story retrofit requirements, and tenant protection ordinances create unique underwriting considerations. We also place apartment loans on properties throughout the United States, with active lender relationships in every major MSA.

Frequently Asked Questions About Apartment Loans

FAQ