GSEs Offer Competitive Rates for Affordable Housing Communities
Digested from “Fannie and Freddie Reward Affordable Housing Properties”
National Real Estate Investor (6/23/15) Anderson, Bendix
Affordable apartment communities may be able to take advantage of lower interest rates through loans from Fannie Mae and Freddie Mac. Loans to naturally occurring affordable apartment communities — meaning they are not enrolled in a federal affordable-housing program — don’t count toward the $30 billion federal loan cap for either government-sponsored enterprise. So Fannie Mae and Freddie Mac can provide more competitive rates to encourage lending to affordable properties without fear of running out of lending capacity.
“Affordable” is determined by the Federal Housing Finance Agency based on the market. For general markets, an affordable apartment rents “at rates affordable [30 percent or less of their income] to households earning 60 percent of the area median income [AMI].” In markets with high housing costs, the standards rise to affordable to those making 80 percent of AMI; for high-cost markets, it’s apartments affordable to those earning AMI.
Smaller properties, with 50 units or less, and manufactured housing properties are also exempt from the limit and may also be able to take advantage of more competitive rates.