Fannie Mae vs Freddie Mac vs HUD 223(f): the same building, three loan sizes
Run one stabilized apartment building through all three at the same rate and HUD 223(f) sizes the largest loan: in the example below, $8.12 million against $7.40 million from Fannie Mae or Freddie Mac. The gap comes from three published numbers: a 1.15x coverage minimum instead of 1.25x, 35 years of amortization instead of 30, and 87% LTV instead of 80%.
The trade-off: no prepayment for five years, mortgage insurance, and no published closing timeline.
The building
A 45-unit market-rate building, stabilized, worth $12 million, with $720,000 of net operating income. The owner wants to refinance and plans to hold for ten years. Every loan is priced at 6.75%, which is the 10-year Treasury (5.00% on October 23, 2026) plus an example spread of 1.75%. Real spreads differ by program and lender, and nobody publishes them, so holding the rate constant isolates what the programs’ own rules do.
What each program allows
| Fannie Mae DUS | Freddie Mac Conventional Small | HUD 223(f) | |
|---|---|---|---|
| Max LTV | 80% = $9.60M | 80% (10-yr term) = $9.60M | 87% = $10.44M |
| Min coverage | 1.25x | 1.25x | 1.15x |
| Amortization | 30 years | 30 years | 35 years |
| Max by coverage | $7.40M | $7.40M | $8.12M |
| Loan | $7.40M | $7.40M | $8.12M |
| Monthly principal and interest | $48,000 | $48,000 | $50,481 |
| Mortgage insurance | none | none | $20,309 upfront, about $1,692 a month in year one |
Coverage caps all three. At 6.75%, $1 of loan over 30 years costs $0.0778 a year in principal and interest. Fannie and Freddie need $1.25 of NOI for each $1 of that, so $720,000 ÷ (1.25 × 0.0778) is about $7.40 million. HUD needs $1.15, spreads the loan over 35 years (a constant of 0.0746), and still comes out at $8.12 million after counting the 0.25% annual premium as part of the payment. Leave the premium out and it would be about $8.40 million.
The appraisal doesn’t matter here. All three loans are well below their LTV limits. A $13 million value wouldn’t move any of them.
When LTV takes over
Drop the rate a point to 5.75% and raise NOI to $900,000, and coverage stops binding. Now each loan hits its LTV ceiling: HUD at $10.44 million, Fannie and Freddie at $9.60 million. Fannie Mae’s Small Loans product would stop at $9.00 million, its program cap.
So the HUD advantage shrinks or grows with rates. When coverage binds, it’s the 1.15x and the extra five years of amortization. When LTV binds, it’s seven points of value.
What the extra money costs
The prepayment bar
The National Housing Act prohibits prepaying a 223(f) loan for five years after endorsement, with limited exceptions. If you might sell in year three, that’s the end of the comparison. Fannie and Freddie loans can be prepaid with yield maintenance or a premium.
Mortgage insurance
For applications from October 1, 2025, HUD charges 0.25% upfront and 0.25% a year on every multifamily program (FR Doc 2025-18379). On $8.12 million that’s about $20,000 at closing and $20,000 in the first year.
Time
HUD publishes no closing timeline for 223(f). Fannie Mae’s term sheet lists rate locks of 30 to 180 days; Freddie’s Conventional Small sheet offers a 60-day spread lock after application. Ask any lender for their recent close times before you count on a date.
What you get besides proceeds: a loan that fully amortizes over 35 years with no balloon, non-recourse to the borrowing entity, and a rate locked by initial endorsement.
Why Freddie’s bigger loan isn’t in the table
Freddie Mac’s Optigo Conventional fixed-rate loans start at $10 million, and this building sizes to $7.40 million. Its small-loan product, Conventional Small, takes $2 million to $10 million on 5 to 50 units, which fits. A 60-unit version of this building would fall out of Conventional Small and still be under Optigo’s $10 million floor, leaving Fannie Mae and HUD.
Try your own
The numbers above come straight out of the comparison app. Put in your building and it shows each program’s max, what binds it, and where your plan conflicts with a program’s prepayment or size rules. The program page has every limit with its source and date.