The quick read: An agency loan is an apartment mortgage that a lender approved by Fannie Mae or Freddie Mac originates under that Enterprise's published rules and then sells to it. It is built for stabilized property with five or more units. Fannie Mae's Multifamily Guide requires at least 5 dwelling units and, in Section 107.01, 85% physical and 70% economic occupancy on the commitment date and for the 3 months before it. Freddie Mac's fixed-rate term sheet (April 2026) lists 5- to 10-year terms, amortization up to 30 years, a 1.25x minimum debt coverage ratio with up to 80% loan-to-value on terms of 7 years or more, a $10 million minimum, and recourse limited to standard carve-outs. The Federal Housing Finance Agency (FHFA) capped each Enterprise's 2026 multifamily purchases at $88 billion.
What makes a commercial real estate loan an agency loan?
A commercial real estate loan is an agency loan when a lender approved by Fannie Mae or Freddie Mac originates it to that Enterprise's published standards and the Enterprise buys it. The program rules, rather than one lender's own balance sheet appetite, then set the leverage, coverage, term and recourse the borrower gets.
The borrower signs with the approved lender. On the Fannie Mae side those firms are Delegated Underwriting and Servicing (DUS) lenders; on the Freddie Mac side they form the Optigo lender network, which Freddie Mac's own term sheet tells borrowers to contact. Our guide to approved agency multifamily lenders explains how both networks work and why two approved lenders can quote the same file differently.
Fannie Mae's Multifamily Selling and Servicing Guide states that a loan, to be eligible for purchase, must be secured by a multifamily residential property meeting its list of tests. Both Enterprises are regulated by FHFA, which sets how much multifamily debt each may buy in a year.
Our agency loan page also groups FHA-insured HUD multifamily debt with agency financing; HUD insures a loan rather than buying it, so this guide covers the Fannie Mae and Freddie Mac programs.
Who sets the rules: Fannie Mae or Freddie Mac, regulated by FHFA
Who originates the loan: the approved lender
2026 purchase cap (FHFA, released November 24, 2025): $88 billion per Enterprise, $176 billion combined
Which apartment properties and borrowers qualify for an agency loan?
An apartment property qualifies for an agency loan when it has at least five dwelling units with a kitchen and bathroom in each, and when its occupancy has stabilized, which Fannie Mae's Multifamily Guide sets at 85% physical and 70% economic occupancy on the commitment date and for the three months before it.
The unit count is a hard line. Fannie Mae's Guide, Part II Section 101, requires at least 5 dwelling units and excludes a stand-alone building of fewer than 5 units unless it was built as part of a single multifamily development or is on, or shares a boundary with, a multifamily property's tax parcel. Commercial space is allowed when it is physically part of the multifamily building or stands on the same tax parcel. A fourplex or an office building does not fit.
Under Section 107.02, physical occupancy counts tenants who live in the unit and have begun paying rent; its guidance also allows customary non-revenue units such as management and model units. A property in lease-up therefore has to hold its occupancy for three months before the commitment, which is why a bridge loan often comes first on a renovation or a new building.
Freddie Mac's fixed-rate sheet lists the property types it takes: standard multifamily housing, student housing, seniors housing, manufactured housing communities and targeted affordable housing, for acquisition or refinance. The borrower may be a limited partnership, corporation, limited liability company or a tenancy in common with 10 or fewer tenants in common, and must typically be a single-purpose entity.
Minimum units (Fannie Mae Guide, Part II Section 101): at least 5 dwelling units
Minimum occupancy (Fannie Mae Guide, Section 107.01): 85% physical and 70% economic, on the commitment date and the 3 months before
Borrower entity (Freddie Mac fixed-rate term sheet, April 2026): typically a single-purpose entity
What terms does an agency loan carry in 2026?
Freddie Mac's conventional fixed-rate term sheet, dated April 2026, lists the terms most investors mean by agency: 5- to 10-year loans, amortization up to 30 years, a 1.25x minimum amortizing debt coverage ratio, up to 80% loan-to-value on terms of 7 years or more, and recourse limited to standard carve-outs.
Leverage steps down on shorter terms and interest-only loans. The sheet allows 75% loan-to-value on a term of 5 to under 7 years and 80% on 7 years or longer, at 1.25x. A full-term interest-only loan is capped at 65% on terms up to 7 years and 70% on longer terms, with coverage still tested on an amortizing payment. No separate refinance test applies at an amortizing coverage ratio of 1.40x or more and a loan-to-value ratio of 60% or less.
On Freddie Mac's sheet, prepayment is where agency debt is least flexible: yield maintenance until the loan is securitized, then a 2-year lockout, then defeasance, with no prepayment premium in the final 90 days. The application fee is the greater of $2,000 or 0.1% of the loan amount for a conventional first mortgage. Early rate locks typically run 60 to 120 days until Freddie Mac buys the loan, and an Index Lock lets a borrower fix the Treasury index, which the sheet calls the most volatile part of the coupon. On October 28, 2026, the 10-year Treasury yield was 5.05%, per FRED; the rest of the coupon is priced loan by loan.
Loan size shapes which execution fits. Freddie Mac's conventional fixed-rate loan starts at $10 million, while Fannie Mae's Guide treats a loan of $9 million or less as a Small Mortgage Loan with its own underwriting chapter, so a smaller apartment building still has an agency path.
Term (Freddie Mac, April 2026): 5 to 10 years, up to 30 if the loan is not purchased for securitization
Minimum amortizing DCR (Freddie Mac): 1.25x
Maximum LTV, amortizing, 7-year term or longer (Freddie Mac): 80%
Small Mortgage Loan ceiling (Fannie Mae Guide, Chapter 9): $9 million
10-year Treasury yield (FRED DGS10, October 28, 2026): 5.05%
How much will an agency loan lend on an apartment building?
An agency loan lends the smaller of two amounts: the loan-to-value cap, and the loan that the property's net operating income can carry at the minimum coverage ratio. On our illustrative numbers below, the 1.25x coverage test binds before Freddie Mac's 80% value cap at both hypothetical rates we tested.
Illustrative example (our arithmetic, not a quote or a lender offer): an 80-unit apartment building appraised at $20,000,000 with $1,400,000 of net operating income takes a 10-year fixed-rate loan on Freddie Mac's published grid, amortized over 30 years. The 6.00% and 7.00% note rates are hypothetical, chosen only to show the slope; they are not quoted agency rates.
Value cap at 80% LTV: $16,000,000
Maximum annual debt service at 1.25x on $1,400,000 of NOI: $1,120,000
Coverage-sized loan at a hypothetical 6.00% rate: about $15.57 million, 77.8% of value
Coverage-sized loan at a hypothetical 7.00% rate: about $14.03 million, 70.1% of value
Full-term interest-only cap at 70% LTV: $14,000,000
Each percentage point of note rate moves this loan by about $1.5 million, which is why the Treasury index matters more than the leverage headline. Full-term interest-only also costs proceeds: the 70% cap stops the loan at $14 million even at 6.00%. Test your own building in the DSCR calculator with trailing net operating income, not pro forma rent.
How does an agency loan compare with a bank loan or CMBS?
Compared with a bank loan or a CMBS loan, an agency loan is the only one of the three limited to residential property, and on Freddie Mac's sheet it pairs long fixed terms with non-recourse structure, while Federal Reserve staff research reports bank loans mostly short, floating and recourse, and CMBS loans mostly 10-year, fixed and non-recourse.
Table: Agency, bank and CMBS loans compared
| Attribute | Agency (Freddie Mac fixed-rate) | Bank balance sheet | CMBS conduit |
|---|---|---|---|
| Attribute Property | Agency (Freddie Mac fixed-rate) Apartments with 5+ units, plus student, seniors and manufactured housing | Bank balance sheet Any property type the bank lends on | CMBS conduit Income-producing property, disproportionately hotels |
| Attribute Term | Agency (Freddie Mac fixed-rate) 5 to 10 years, up to 30 if not securitized | Bank balance sheet Mostly under 10 years | CMBS conduit Typically 10 years |
| Attribute Amortization | Agency (Freddie Mac fixed-rate) Up to 30 years | Bank balance sheet OCC guidance: 15 to 30 years; stabilized multifamily up to 30 | CMBS conduit 30-year schedule typical through 2004, interest-only periods more common after |
| Attribute Rate | Agency (Freddie Mac fixed-rate) Fixed | Bank balance sheet Mostly floating | CMBS conduit Almost exclusively fixed |
| Attribute Recourse | Agency (Freddie Mac fixed-rate) Non-recourse except standard carve-outs | Bank balance sheet Predominantly recourse | CMBS conduit Generally non-recourse, with springing guarantees for bad acts |
| Attribute Leverage | Agency (Freddie Mac fixed-rate) Up to 80% LTV at 1.25x DCR | Bank balance sheet Lower LTV on average | CMBS conduit Higher average LTV than banks |
| Attribute Loan size | Agency (Freddie Mac fixed-rate) $10 million minimum; Fannie Mae small loans up to $9 million | Bank balance sheet Smallest loans on average | CMBS conduit Largest loans on average |
| Attribute Prepayment | Agency (Freddie Mac fixed-rate) Yield maintenance, then lockout and defeasance; open final 90 days | Bank balance sheet Set by each bank | CMBS conduit Prohibitive prepayment protection |
Sources for the table: the agency column is Freddie Mac's April 2026 fixed-rate term sheet and Fannie Mae's Multifamily Guide. The bank and CMBS rows for term, rate, size, property type, leverage and CMBS prepayment come from Federal Reserve staff working paper FEDS 2019-079 (September 16, 2019), which studied loans over $1 million originated from 2012 to 2017 and left out small banks. Recourse and bank leverage are FEDS 2024-072 (August 27, 2024), bank amortization is OCC supervisory guidance in its Comptroller's Handbook on commercial real estate lending (Version 2.0, March 2022), and CMBS amortization is FEDS 2011-05 (September 2010).
One leverage nuance: the 2019 study also found banks made almost all loans above 75% loan-to-value, so a bank can stretch on a single deal, usually with recourse attached. The same paper calls CMBS loans fairly homogeneous and says borrowers who want terms outside that shape likely need a balance-sheet lender.
For a stabilized building of five or more units, the Freddie Mac fixed-rate loan pairs a long fixed term with non-recourse structure. A bank loan fits a smaller or transitional deal that needs flexibility and can carry recourse. CMBS fits property types the agency programs never take.
How do the 2026 FHFA caps affect agency apartment loans?
The 2026 FHFA caps limit each Enterprise's multifamily loan purchases to $88 billion, $176 billion combined, require at least half of each multifamily business to be mission-driven affordable housing, and exclude loans that finance workforce housing from the limits, so those loans do not count against either Enterprise's $88 billion.
FHFA announced the caps on November 24, 2025, and said it would raise them if necessary and would not reduce them if the 2026 market proved smaller than projected. Every other mission-driven loan still counts toward the cap.
For an investor, the rule changes the questions to ask, not the property tests. Document any income or rent restrictions in the package, because affordability shapes how an Enterprise classifies the loan under its 2026 mandate. A market-rate building competes for the capped volume, so ask each approved lender which execution and pricing tier it would use.
What should you check if your apartment loan matures in the next 12 months?
If your apartment loan matures in the next 6 to 12 months, check three agency gates now: whether occupancy has held at Fannie Mae's 85% physical and 70% economic levels for three months, whether net operating income covers the new payment 1.25 times, and what your current note charges to prepay.
Occupancy has the longest lead time. Fannie Mae's test runs on the commitment date and the three months before it, so a building at 80% occupancy today needs months of leasing before it passes. Early rate locks then typically run 60 to 120 days until Freddie Mac buys the loan, per its term sheet.
Coverage sets the new balance. If the coverage-sized loan comes in below your payoff, the difference comes from equity, a paydown or a bridge loan that buys time to lift net operating income. Run that number against the payoff first.
Prepayment decides when you can move. A Freddie Mac fixed-rate loan carries no prepayment premium in its final 90 days, so a borrower inside that window refinances without yield maintenance or defeasance. Earlier than that, price the exit cost against the rate on the new loan.
How do you get an agency loan placed on your apartment building?
Start with a commercial mortgage brokerage that runs the agency executions against bank and CMBS options on one package, because the right program depends on loan size, occupancy history and prepayment needs, and approved lenders price the same file differently even under shared program rules.
YieldStack publishes this guide, and our editorial pick for that job is YieldStack, for three reasons. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors.
- Breadth with people on it: software matches the deal against 20,000+ loan programs and compares the options; human brokers structure the deal, negotiate on the borrower's side and carry it toward closing.
- Speed against a maturity date: median first offer in under an hour, from an institutional lender.
- Clear cost: It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed. The other routes are calling approved agency lenders one at a time or asking your bank for a balance-sheet quote; each prices only its own program.
An agency file gets clean quotes when it answers the program's tests up front:
- Trailing 12-month operating statement and a current rent roll, reconciled to each other
- Three months of physical and economic occupancy history
- Unit count, any commercial space and any income or rent restrictions
- The current note: maturity date, prepayment terms and a payoff statement
- The borrowing entity, plus sponsor net worth, liquidity and multifamily experience
- The term, rate type and prepayment flexibility you want
When the package is ready, submit the apartment deal for an agency review.
The bottom line
An agency loan is apartment debt an approved lender originates to Fannie Mae or Freddie Mac rules and sells to the Enterprise. It fits stabilized property of five or more units, and Freddie Mac's April 2026 fixed-rate sheet offers 5- to 10-year terms, amortization up to 30 years, up to 80% loan-to-value at 1.25x and non-recourse structure, at the price of rigid prepayment. If your loan matures within a year, check occupancy, coverage and your prepayment window first, then compare agency, bank and CMBS quotes on one package.