Fannie Mae small loan, bank or bridge: which lender refinances a 6-unit building?
Short answer: Loan size decides first, then whether the building is stabilized. Freddie Mac Conventional Small starts at $2 million. Fannie Mae Small Mortgage Loan publishes no minimum and runs to $9 million, but the lenders who place it set their own floor (in Blue Sky's experience, around $2 million in practice). Below those floors, a 6-unit refinance goes to a community bank or a private credit lender. If the building has vacancies, below-market rents or work to finish, a bridge loan comes first and the permanent refinance follows once it stabilizes.
I'm Dominick Prevete, founder of Blue Sky Capital Advisors. My background: 31+ years in real estate finance, including regional leadership of a business generating over $2 billion in annual sales volume, and 100+ bank and institutional lender relationships.
Start with the loan size
- Freddie Mac Conventional Small: $2M–$10M, 5–50 unit properties. Below $2 million there is no Freddie Mac execution — a community bank or private credit lender is the path.
- Fannie Mae Small Mortgage Loan: No stated minimum; practical floor ~$2M, up to $9 million, 5 units and up.
- Community and regional bank: $1M minimum in Blue Sky's placements.
- Private credit: $500K minimum. Bridge loans start at $500K.
Freddie Mac retired the Small Balance Loan program on April 15, 2026 and replaced it with Conventional Small, which covers $2 million to $10 million on properties of 5 to 50 units. Owners still search for the old program by name; this is what replaced it.
What that means for a 6-unit building: A 6-unit refinance often lands below the agency floors. When it does, the real choice is a community bank against private credit, and the deciding questions are recourse, term length and how fast you need to close. When the loan is large enough for an agency program and the building is stabilized, agency terms are usually worth the extra time. Agency execution generally prices inside bank and private credit for comparable leverage.
Then ask: is the building stabilized?
Agency and bank lenders want a stabilized building. If yours isn't there yet, a bridge loan buys the time to get it there, and the permanent refinance comes after. In Blue Sky's placement experience, agency lenders look for 90 days at 90% occupancy before they will size the loan.
Bridge loans are short and interest-only (1–2 yr, 6-month extensions standard), so the takeout plan matters as much as the bridge itself. More on that: Bridge loans and the bridge-to-agency takeout.
The four options side by side
| Fannie Small Mortgage Loan | Freddie Conventional Small | Community & regional bank | Private credit / debt fund | |
|---|---|---|---|---|
| Loan size | No stated minimum; practical floor ~$2M | $2M – $10M | $1M minimum | $500K minimum |
| Term | 5 – 30 yr, fixed or variable | 5, 7, 10, 12, 15 yr fixed | 5 yr with reset typical; 7 and 10 yr sometimes available | Bridge: 1–2 yr · Stabilized: up to 30 yr fixed |
| Amortization | Up to 30 yr | Up to 30 yr | 25 yr common; 30 yr widely available | Bridge: interest-only |
| Max leverage | 80% LTV | 75–80% LTV amortizing; 65–70% LTV full-term interest-only, by term | 70–75% LTV | Bridge: up to 80% LTC |
| Minimum DSCR | 1.25x | 1.25x amortizing | 1.20–1.25x | Bridge: no test, sized to LTC with interest reserve · Stabilized: 1.10x |
| Recourse | Non-recourse with standard carve-outs | Non-recourse except standard carve-outs | Full recourse standard | Non-recourse with carve-outs; completion or carry guarantee on heavier business plans |
| Prepayment | Yield maintenance or declining prepayment premium | Yield maintenance until securitized, then 2-year lock-out, defeasance thereafter; step-down available at additional cost | Step-down, typically 5-4-3-2-1 | Bridge: 90-day minimum interest |
| Stabilization | Required | Required | Effectively required | Not required |
| Time to close | Approximately 1–2 weeks longer than bank | Approximately 1–2 weeks longer than bank | Baseline | Approximately 30 days |
Pricing is not compared here. Agency execution generally prices inside bank and private credit for comparable leverage.
Agency terms as of April 2026, per Freddie Mac Optigo and Fannie Mae Multifamily term sheets. Bank and private credit terms reflect Blue Sky placement experience. Program terms are set by the lender and change without notice.
The full five-column comparison is on /multifamily.
When each one wins
| Option | Choose it when | Watch for |
|---|---|---|
| Fannie Mae or Freddie Mac small loan | The loan clears the lender's floor, the building is stabilized, and you want a long fixed term without personal recourse | More paperwork, and the close runs approximately 1–2 weeks longer than a bank |
| Community or regional bank | You want a local relationship, can bring deposits, and a shorter term that resets fits your plan | Full recourse is standard, and banks at their CRE concentration limits pause new loans |
| Private credit | The loan is under the bank's or agency's floor, or you want a long term on a building a bank won't size | Higher cost than agency or bank. Compare the whole term sheet, not just the payment |
| Bridge loan | The building isn't stabilized yet | Short term, interest-only. You need a credible exit to a permanent loan |
A real 6-unit refinance
Blue Sky Capital Advisors arranged a $1,100,000 private credit refinance with a 30-year term on a six-unit apartment building at 191 W Broadway in Paterson, New Jersey, closing in May 2026.
For a larger building, Blue Sky Capital Advisors arranged a $2,000,000 Freddie Mac loan on a nine-unit apartment building at 105 Lehigh Avenue in Paterson, New Jersey, closing in September 2025.
More closings: Transactions · Paterson multifamily loans
Which New Jersey banks are adding apartment loans
In the year to June 30, 2026, ten of the 35 New Jersey banks with CRE books above $50 million shrank their CRE books and eleven grew theirs by 10% or more. If your current bank says no, check whether it is one of the banks shrinking its CRE book. The full list is in Blue Sky's NJ Bank CRE Lending Tracker.
How Blue Sky helps
Dominick Prevete of Blue Sky Capital Advisors takes a 6-unit refinance to the lenders most likely to say yes, across agency programs, banks and private credit, and brings their term sheets back so you can compare them side by side. Before that, he will tell you plainly which of the four options your building qualifies for, and run the numbers through the multifamily loan sizer with you. How Blue Sky gets paid.
Within 24 hours on a business day, Dominick sizes up your deal: which lenders fit, how he'd structure it, and what it takes to close.
Refinancing a small apartment building?
- Talk to Dominick directly: (908) 220-6404 or dominick@blueskycapitaladvisors.com.
- Send Dominick your deal.
Related: Balloon refinance guide · Why was my apartment loan declined?