Fannie Mae DUS (Delegated Underwriting and Servicing) is Fannie Mae’s flagship multifamily lending program, through which approved lender partners originate, underwrite, and service conventional multifamily mortgage loans under delegated authority. “Delegated” means the DUS lender — not Fannie Mae — makes the credit decision, though within Fannie Mae’s underwriting guidelines. In exchange for this authority, the DUS lender shares in the credit risk by retaining a portion of any losses (typically one-third). DUS loans are typically 7- to 15-year fixed-rate loans with 30-year amortization, offering competitive rates because they are backed by Fannie Mae’s government-sponsored enterprise (GSE) guarantee. DUS loans are available for stabilized multifamily properties with five or more units and are one of the most cost-effective sources of long-term multifamily debt in the market.
How It Works in Practice
For multifamily borrowers, Fannie Mae DUS loans offer some of the most attractive terms available — low rates, high leverage (up to 80% LTV), long amortization, and flexible prepayment options including yield maintenance and declining prepayment premiums. However, DUS loans come with specific requirements: minimum DSCR thresholds (typically 1.25x), occupancy requirements at closing, and ongoing reporting obligations. The underwriting process is more standardized than a bank loan, which can be an advantage (predictability) or a disadvantage (less flexibility for unusual situations). Borrowers should understand that DUS lenders vary significantly in execution quality, pricing, and willingness to push the envelope on Fannie Mae’s guidelines. The servicing relationship also matters — your DUS lender services the loan for its entire term, so you’re choosing a long-term partner. LoanBoss tracks Fannie Mae DUS loan provisions including prepayment schedules, covenant tests, and reporting deadlines across multifamily portfolios.
Related Terms
Part of the LoanBoss CRE Debt Glossary. For hedging-specific terms, see Pensford’s resources.