FANNIE MAE® ® Adjustable Rate Mortgage (ARM) 7-4

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Arbor’s DUS ARM 7-4 product offers a 7-year variable-rate financing option with an embedded cap, and fixed-rate conversion option for properties with 5 to 50 units and Multifamily Affordable Properties of any size.

Minimum Loan Amount


Loan Term 7 years

Up to 30 Years

Minimum DSCR 1.00 at the maximum lifetime interest rate to borrower. Mortgage loan shall not exceed that of a fixed-rate loan with similar terms.
Maximum LTV 80%; 75% on cash-out refinances

One-month LIBOR; 15-day look-back

Interest Rate

Adjusted based on changes to the underlying index and is equal to the index plus a margin.

Interest Rate Cap

4% MBS Pass-Through Rate; Maximum lifetime interest rate to the Borrower equal to the sum of 4%, plus the Guaranty Fee Rate, plus the Servicing Fee Rate; Interest rate floor equal to the Margin (MBS Investor spread, plus the Guaranty Fee Rate, plus the Servicing Fee Rate); and Interest rate increases or decreases limited to 1% per month.



Eligible Properties Existing stabilized properties with 5 to 50 units, Multifamily Affordable Properties of any size and Manufactured Housing Communities.
Eligible Borrower Single-asset entity
Occupancy Requirement 85% physical occupancy, 70% economic occupancy; 90% physical occupancy if loan amount is under $3M
Tax and Insurance Escrows Monthly deposits required.
Replacement Reserve Underwritten at a minimum $250 per unit per annum
Recourse Typically non-recourse with standard carve-outs. Loans less than $3M may be recourse (depending on MSA)
Commercial Space Maximum 35% of net rentable area and maximum 20% of effective gross income
Required Reports Appraisal, Property Condition Assessment and Phase I
Prepayment 1-year lock out from voluntary prepayment; 1% Prepayment Premium is applicable following the lock-out period; and No Prepayment Premium due during the last 3 months prior to the Maturity Date.
Assumable Subject to approval and 1% fee (non-recourse loans only)
Supplemental Loans Not permitted prior to conversion to fixed rate. The ARM execution is eligible to be used for approved Supplemental Loans.
Pricing Tiered Pricing Matrix. More favorable terms available for higher DSC and lower LTV.
Rate Lock 30- to 180- day commitments are available for an additional cost
Application Deposit $12,500. Covers all estimated underwriting costs (including processing fee).
Processing Fee $3,000 non-refundable
Origination Fee Minimum 1%.
Legal/Closing Fee Arbor’s Counsel Fee to be determined at application
Good Faith Deposit $5M and less can be 1%
Conversion to Fixed Rate The ARM 7-4 Loan is convertible to fixed rate in years 2 through 5 of the ARM Loan term; All conversions are subject to the conversion requirements set forth in the Loan Documents; No Prepayment Premium is due at the time of conversion to a fixed-rate Mortgage Loan; and Setting the Guaranty Fee Rate and the Servicing Fee Rate for the fixed-rate Mortgage Loan at current levels when the Borrower enters into a Rate Lock with the Lender for the fixed rate Mortgage.
Arbor Commercial Mortgage | | 800.ARBOR.10