HUD 223(f) vs Fannie DUS vs Freddie SBL: A Sponsor's Decision Matrix

Three institutional permanent options dominate stabilized multifamily over $5M: HUD 223(f), Fannie Mae DUS, and Freddie Mac Optigo (with the Small Balance Loan program for smaller deals). All three are non-recourse. All three are long-term debt. Choosing the right one depends on hold period, leverage need, prepay flexibility, and execution speed.

HUD 223(f)

Best long-term economics in commercial real estate. 35-year fully amortizing non-recourse. Lowest fixed rate available on stabilized multifamily. Trade-offs: 6 to 12 months from application to close, MIP (mortgage insurance premium) on top of the rate, and rigid prepay (lockout then declining penalty).

Fannie Mae DUS

5 to 12 year fixed rate, 30-year amortization, non-recourse, closes in 45 to 90 days. More flexible prepay (yield maintenance most common). Higher leverage tolerance than HUD on most deals. Best when you want speed and flexibility but still want institutional permanent debt.

Freddie Mac Optigo

Same general structure as Fannie DUS. Pricing varies day-to-day between the two — competitive bidding between Fannie and Freddie lenders is the standard. Freddie Small Balance Loan (SBL) covers $1M to $7.5M and is the right program below the conventional agency floor.

How to Decide

Holding 15+ years on a stabilized asset where every basis point of rate matters: HUD 223(f). Holding 5 to 12 years and want flexibility: Fannie or Freddie conventional. Loan size below $7.5M: Freddie SBL or Fannie Small Loans. We quote all three side by side so you can see the actual numbers, not the brochure numbers.