FANNIE MAE® Adjustable Rate Mortgage (ARM) 7-6

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Arbor’s DUS ARM 7-6 product offers low-cost financing with an initial interest rate lower than available fixed rates, a maximum interest rate that is set upon loan origination and the ability to convert to fixed-rate financing.

Loan Amount

$1,000,000 minimum

Loan Term 7 years

Up to 30 Years. Interest-only option is available subject to meeting eligibility criteria.

Minimum DSC

1.00 at Maximum Interest Rate

Maximum LTV Up to 80% LTV
Interest Rate Limits Maximum ARM rate set at rate lock with the cost of the interest rate CAP included. The interest rate will reset every 30 days based on the applicable onemonth LIBOR yield. 1% maximum increase or decrease to rate at each ARM change.
Rate Structure

Pricing is based on a margin plus the current one-month LIBOR

Eligible Properties

Mortgage loan for the acquisition or refinance of multifamily properties

Eligible Borrower

Single-asset entity

Occupancy Requirement 85% physical occupancy, 70% economic occupancy; 90% if loan amount is under $3,000,000
Tax and Insurance Escrows Monthly deposits required.
Replacement Reserves 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)
ARM Look Back 15-day look back for ARM adjustment
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 Lockout for one year followed by a 1% prepayment premium during the ARM period. No prepayment premium during the last three months of ARM term.
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-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 2% of loan amount
Conversion to Fixed Rate Any time beginning on the first day of second loan year and ending on the first day of the sixth loan year. The borrower may convert to either a 10/9.5 or a 7/6.5 fixed yield maintenance loan. No prepayment charged upon conversion. Conversion requires minimal re-underwriting. Loan amount cannot be increased, but borrower may request a Supplemental Loan. No change to guaranty and servicing fees upon conversion.
Arbor Commercial Mortgage | | 800.ARBOR.10