Fannie Mae DUS

Fannie Mae DUS, short for Delegated Underwriting and Servicing, is a multifamily lending program in which Fannie Mae authorizes approved lenders to underwrite, close, and service loans without prior Fannie Mae approval. In exchange, the lender retains a share of loan losses, aligning its interests with Fannie Mae's on non-recourse debt secured by rental properties.

How Does Fannie Mae DUS Work?

Fannie Mae DUS works by delegating credit decisions to a small network of approved lenders who underwrite and close multifamily loans to Fannie Mae standards, then sell them to Fannie Mae, which securitizes each loan into a DUS MBS. The lender keeps servicing and, critically, keeps a slice of the credit risk.

Per the Fannie Mae DUS Program Overview, the most common loss-sharing structure is pari passu, in which the lender bears one-third of any loss and Fannie Mae absorbs the remaining two-thirds. Some transactions use a first-loss structure, and a few carry no lender loss sharing. This retained risk is what lets Fannie Mae grant delegated authority: the lender has money on the line.

Per Fannie Mae Multifamily and CommLoan, DUS loans generally require at least five residential units, roughly 85% physical and 80% economic occupancy, and target stabilized, income-producing rental property. The average DUS loan was about $17,000,000 as of December 31, 2024.

Why Fannie Mae DUS Matters

Fannie Mae DUS matters because it is the primary channel through which Fannie Mae supplies liquidity to the U.S. apartment market, and delegation is what makes that liquidity fast. Because the lender can underwrite and close without Fannie Mae signing off on each deal, borrowers get certainty and speed that a fully centralized program could not match.

Per Fannie Mae, the DUS program has provided more than $270 billion in liquidity and financed more than 5.8 million housing units since its 1988 launch, and Fannie Mae issued roughly $55 billion in DUS MBS in 2024 alone. The lender loss-sharing model, unusual among securitization programs, is widely credited with keeping DUS credit losses low across cycles.

The quotable point for an operator: Fannie Mae DUS is one of the few programs where the lender that quotes your loan also keeps a piece of the risk, which is why its underwriting is disciplined and its execution is fast.

Example

A sponsor acquires a stabilized $25,000,000 apartment property and applies for a Fannie Mae DUS loan. The lender sizes proceeds against both an 80% LTV ceiling and a 1.25x minimum DSCR, then lends the lower of the two. The table walks the calculation.

Here both tests land near $20,000,000, so the loan sizes to $20,000,000. If net operating income were only $1,300,000, the DSCR test would cap annual debt service at $1,040,000 and the loan at roughly $17,300,000, below the LTV ceiling, and DSCR would bind.

Variations and Edge Cases

Fannie Mae DUS is not one product: execution and terms shift by property type and loss-share structure. The table below covers variants an operator should confirm before applying.

A structural constraint sits above every DUS deal: the FHFA volume cap. Per FHFA, Fannie Mae was limited to $73 billion in multifamily loan purchases in 2025, with at least 50% required to be mission-driven affordable housing, which shapes how much DUS capacity is available and to whom.

Fannie Mae DUS vs Freddie Mac Optigo

Fannie Mae DUS is often confused with Freddie Mac Optigo, and both are agency multifamily programs run through approved-lender networks, but their credit models differ. Fannie Mae DUS delegates underwriting to lenders who retain loss-sharing risk on each loan. Freddie Mac Optigo lenders originate to Freddie Mac guidelines, but Freddie Mac generally re-underwrites and typically holds the credit risk itself.

The practical difference is who owns the risk and the decision. Under DUS, the lender's retained risk drives disciplined, delegated, fast underwriting. Under Optigo, Freddie Mac's central re-underwriting can add a review step but removes lender loss-sharing on most conventional loans.

Frequently Asked Questions

What does DUS stand for in Fannie Mae?DUS stands for Delegated Underwriting and Servicing. It is a Fannie Mae multifamily program in which approved lenders underwrite, close, and service loans without prior Fannie Mae approval, and in return retain a share of any credit losses on the loans they sell to Fannie Mae.

What are typical Fannie Mae DUS loan terms?Fannie Mae DUS loans typically run $1,000,000 to over $50,000,000, with 5 to 30 year terms, amortization up to 30 years, a maximum 80% LTV, and a minimum DSCR around 1.25x. They are non-recourse with standard carve-outs and secured by stabilized rental property of five or more units.

How does loss sharing work in the DUS program?In the DUS program, the lender retains part of the credit risk on each loan. The most common structure is pari passu, where the lender bears one-third of any loss and Fannie Mae absorbs two-thirds. This retained risk aligns the lender's interests with Fannie Mae's and supports delegated underwriting.

Related Terms

• Agency Debt

• Multifamily

• Debt Service Coverage Ratio

• Loan to Value Ratio

• Non-Recourse Loan