There are many multifamily investors who prefer adjustable-rate financing for their investments. The Fannie Mae ARM 7-4 loan is one such popular loan product in the multifamily space, but the 4% cap on the interest rate may be a bit too pricey upfront for some borrowers. That is exactly where the Fannie Mae ARM 7-6 loan comes into play. 

Much like the ARM 7-4, the 7-6 can be converted into a fixed-rate loan at any point between the first day of the second year and the first day of the sixth year. The key difference, however, is that the lifetime interest to the borrower is capped at 6% rather than 4%. Still, it boasts the same nonrecourse structure, an LTV allowance of up to 80%, and is fully assumable with lender approval and a 1% fee. 

2021 Sample Fannie Mae Terms For ARM 7-6 Loans

Size:  Varies

Terms:  7 years 

Amortization:  Up to 30 years (interest-only options available for eligible borrowers) 

Interest Rate: Based on the 1-month LIBOR plus a margin 

Interest Rate Cap: Determined at rate lock, interest rates cannot increase or decrease more than 1.00% per month 

Maximum LTV:  80%

Minimum DSCR:  1.00 (at max. lifetime interest rate)