Fannie Mae and Freddie Mac (the "agencies") are the largest source of permanent debt for NYC multifamily acquisitions and refinancings. For institutional borrowers acquiring rent-stabilized portfolios in Manhattan or Brooklyn, agency execution typically beats CMBS by 25-75 bps on the all-in coupon and offers non-recourse, prepayment flexibility, and longer interest-only periods.
Agency Underwriting
Agencies underwrite to a stressed debt service coverage ratio (DSCR) floor — typically 1.25x DSCR at the actual coupon for conventional, 1.20x for tier-2 affordable, and 1.55x for student housing. Maximum LTV runs 65-80% depending on property type, market, and borrower experience. The agencies prefer assets with stabilized cash flow over value-add stories, so the underwriting heavily weights trailing-12 NOI.
Rent-Stabilized NYC Multifamily
Both agencies have specific programs for rent-restricted housing. Fannie Mae's MAH (Multifamily Affordable Housing) execution and Freddie's Targeted Affordable Housing both offer pricing discounts of 5-15 bps for properties with rent-restricted units (rent stabilization counts in many cases) and Mission-Driven Capital priorities. The agencies care about whether rents are 80% AMI-restricted, Section 8 contracts, or LIHTC-encumbered — each unlocks different priced executions.
Agency vs CMBS vs Bank Balance Sheet
CMBS pricing for NYC multifamily typically sits 25-75 bps wide of agencies but offers higher proceeds. Bank balance-sheet (life-co or commercial bank) execution offers flexibility on covenants and prepayment but limited proceeds. Most institutional acquisitions Skyline sees in Manhattan use agency at acquisition, then refinance to CMBS or bridge if a value-add plan increases the basis significantly.
- Get a Freddie Index Lock early in diligence — 60 days before close protects spread.
- Agency MAH eligibility on rent-stabilized portfolios is a real pricing advantage; document the stabilization roll thoroughly.
- Interest-only at acquisition (up to full term for stronger sponsors) preserves yield on value-add multifamily.
- For 5+ unit Manhattan portfolios under $50M, the agency execution almost always wins on pricing.
Skyline Properties' multifamily practice routinely coordinates agency lender introductions for acquisition financing. Robert Khodadadian and the Skyline team work with Fannie Mae DUS lenders and Freddie Mac Optigo lenders on NYC multifamily acquisitions. Email info@skylineprp.com for a confidential introduction to agency lenders matched to your acquisition.