Should I use an agency (Fannie/Freddie) loan or CMBS?
Last reviewed: June 13, 2026
Short answer
For stabilized market-rate multifamily, agency (Fannie DUS / Freddie Optigo) usually wins below $75M on flexibility, supplemental-loan capability, and Mission Driven pricing. CMBS tends to win above $75M in Tier 1 markets, on mixed-use with substantial commercial, and where defeasance beats yield maintenance.
Choose agency when
- Loan size is $1M-$75M and the property is conventional market-rate multifamily
- You want supplemental financing capability (Fannie Supplemental / Freddie Acquisition Up) as NOI grows
- The affordability profile qualifies for Mission Driven / Green pricing
- You expect to exit by sale and Treasury rates may fall during the hold (yield maintenance is favorable)
- Speed matters — agency closes in 30-50 days vs 60-90 for CMBS
Choose CMBS when
- Loan size exceeds $75M, or the deal has unusual features (substantial commercial, ground lease, structured equity)
- You want mezzanine layered behind for 85-90% total leverage
- Rising rates make defeasance materially cheaper than yield maintenance
- The deal is held to maturity and you don't need supplemental capability
Illustrative pricing — $30M loan, Tier 1 market (Apr 2024)
| Metric | Fannie DUS | Freddie Optigo | CMBS |
|---|---|---|---|
| 10yr T+ spread | ~155 bps | ~150 bps | ~135-165 bps |
| Max LTV | 80% | 80% | 75% |
| Max DSCR (IO) | 1.30x | 1.30x | 1.25x |
| Closing timeline | 45 days | 45 days | 75 days |
| Supplemental loan | Yes | Yes | No |
Risk-share matters in a workout: DUS/Optigo sellers keep 5% skin in the deal and tend to work with you on covenants. CMBS routes you to a special servicer with a fiduciary duty to bondholders, not the sponsor — covenant negotiation is materially harder.
Decision framework
- <$10M → SBL or Fannie Small Loan
- $10M-$30M conventional → Conventional Optigo or DUS; agency wins on flexibility
- $30M-$75M → run both quotes; agency wins ~70% of the time
- >$75M Tier 1 → CMBS often wins on spread; agency wins on supplemental flexibility
- Affordability present → always run agency Mission Driven; usually beats CMBS by 20-40 bps
Don't just read it — run it. Apply this on your actual numbers, provenance-graded.
Compare lender executions on your deal →Sources
- Fannie Mae DUS, Freddie Optigo & CMBS pricing (lender matrices)Effective / published: April 1, 2024
How we keep this current
Every figure above carries a source and an effective date. Our regulatory-watch process re-dates this page and updates the citations when a rule changes — so the “Last reviewed” stamp is a real freshness signal, not boilerplate. See our methodology & honesty stance.
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